Annual Report
2021
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES Content
ADDITIONAL NOTES TO THIS REPORT
This document is the PDF/printed version of the Annual Report 2021 of Novo Banco S.A.. This version
has been prepared for ease of use and does not contain ESEF information as specified in the Regulatory
Technical Standards on ESEF (Delegated Regulation (EU) 2019/815). The official ESEF reporting
package is available on our website at www.novobanco.pt/investidores. In case of discrepancies
between this version and the official ESEF package, the latter prevails.
Message from the Chairman of the General and Supervisory Board
Interview with the Chief Executive Officer
I. MANAGEMENT REPORT
II. SUSTAINABILITY REPORT
III. FINANCIAL STATEMENTS AND FINAL NOTES
IV. ANNEX
Auditor’s Report on the Consolidated Financial Statements
Auditor’s Report on the Separate Financial Statements
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5
7
92
160
449
Novo Banco, S.A. | Head Office: Av. da Liberdade, n. 195, 1250-142 Lisbon.
Commercial and Tax identification number: 513 204 016
Share Capital: €6 054 907 314
Report of the General and Supervisory Board
Evaluation Report
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Annual Report 2021 Message from the Chairman of the General and Supervisory Board
Dear Stakeholders,
Year 2021 is the year that Novo Banco S.A. (“novobanco”) completed the de-risking of the balance
sheet through the clean-up of the past legacy issues, including disposal of non-core assets and
delivered its first ever profitable annual financial results, helping secure its long-term viability.
The de-risking process of the past legacy issues including the disposal of non-core assets was first
launched immediately following the acquisition of 75% of novobanco by Nani Holdings SGPS S.A. in
October 2017 and has been executed throughout this period to year-end 2021 in accordance with the
agreed Restructuring Plans and commitments by the Republic of Portugal to the European Commission,
State Aid Directorate General for Competition (“DGComp”). The bank considers that all the 33 DG
Comp commitments (Structural, Behavioural & Viability) have been fulfilled by novobanco based on
the key assumptions that underpinned the agreed business plans 2017 to 2021. novobanco remains
under the Restructuring Period until DG Comp completes the assessment of the fulfilment of these 33
commitments.
During the year the bank reduced its balance sheet by €0.7bn relating to disposals of non-performing
loans and related exposures as well as through the normal year-end impairment and revaluation
processes. novobanco signed two separate portfolio asset sales of non-performing loans and related
exposures (“Wilkinson and Orion”), taking advantage of the continued investor appetite for these type
of assets in Portugal, being capital accretive and demonstrating adequacy of NPL coverage. novobanco
reduced the non-performing loan (“NPL”) ratio to 5.7% year-end 2021 and the NPL stock is now less
than €2.0bn. The bank will continue to target a further reduction in the NPL ratio in 2022 to well below
5%, in line with the European average. On 30th November 2021, novobanco completed the sale of the
non-core asset Spanish Branch business which strengthened the capital position of the bank in line
with the strategy to redeploy resources to support its core banking businesses in Portugal.
Year 2021 also saw significant investment in and support of our commercial businesses. Corporate
Banking continued to provide financial support to its customers, particularly given the impacts of
COVID-19 on their business activities as well as promoting and participating in various initiatives (e.g.,
“Portugal que Faz” focusing on business associations or “Soluções novobanco Agricultura” presence
at Agroglobal) helping provide solutions that best fit the challenges faced by companies, at regional
and sectoral level across Portugal. In end of 2021, novobanco successfully secured from the European
Investment Bank (EIB) group funding guarantees of €887.5mn which will allow novobanco to provide
novobanco has delivered
the key objective of
sustainable profitable
growth supporting our
corporate and retail
banking customers.
BYRON HAYNES
Chairman of the General and Supervisory Board
further financing to Portuguese companies up to €1.545bn, supporting job creation and economic
growth.
Retail Banking has continued to successfully roll out its unique new distribution model (“omni-
channel”) to its over 1.0mn customers. To date 116 branches across the country have been re-designed
and refurbished supported by a number of digital initiatives and developments throughout the year.
novobanco´s omni-channel distribution model is providing an integrated customer experience levering
on the new branch model and self-service channels, backed by digital transformation and innovative
products and services.
During the last quarter of 2021, the bank launched its new brand “novobanco” a cornerstone in shaping
our future reflecting its viability, sustainability and through the tireless dedication of its people to
continue to serve our customers with the banking products and services they need now and going
forward.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESAnnual Report 2021 Throughout year 2021, the General and Supervisory Board (“GSB”) and the respective GSB committees
supervised and supported the Executive Board of Directors (“EBD”) in the monitoring and execution of
the bank’s strategic goals and financial targets as set out and agreed in the medium-term plan.
For year 2021 novobanco has delivered the key objective of sustainable profitable growth supporting
our corporate and retail banking customers. Positive net income of €185m is driven by growth in
commercial banking income and a reduction in operating and risk costs supported by maintaining a
strong capital and liquidity position during the year.
For year 2022, realistic strategic goals and financial targets for novobanco have been set and agreed,
building further sustainable positive net income reflecting the continued investing in and support of
our commercial businesses.
On behalf of the GSB, I would like to thank our customers and our other stakeholders for their continued
support, trust and loyalty to novobanco throughout the clean-up of the past legacy issues over the
last four years. Finally, the GSB and myself would like to thank António Ramalho, the rest of the EBD
and the employees of novobanco for all their tremendous hard work, dedication and commitment over
these last four years and in particular in achieving sustainable profitability and growth in 2021.
Byron Haynes
Chairman of the General and Supervisory Board
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESAnnual Report 2021 Perspectives by António Ramalho
António Ramalho, Chairman of Executive Board
of Directors, gives an interview highlighting the
achievements of 2021 and the prospects for the
future of novobanco.
After seven years of cleaning up the balance sheet and with the restructuring cycle completed,
novobanco is embarking on a phase of consolidation of profitability and sustainable business growth.
1: The year 2021 was the turning point in terms of the bank’s profitability, with a net profit of
€185mn. What do you point out as the determining factor in this restructuring cycle?
The results achieved this year are the culmination of several events which, despite the adversities,
enabled novobanco to execute the restructuring plan approved by the DG COMP when the bank was
sold to Lone Star in 2017. Prominent among these are the dedication and resilience of all novobanco’s
employees and the trust placed in us by our clients. During this cycle, it was the conviction that together
we make the future that made it possible to normalise the balance sheet, with a substantial reduction
of legacy assets through sales and revaluations, alongside the optimisation of the operational model,
including the simplification of the organisation and the closure of the international operations, allowing
novobanco to reposition its activity in the domestic market.
The 2021 financial results represent the beginning of a new cycle and the transition to sustainable
profitability with improved operating income (i.e.: Cost to Income of 75% in 2017 vs 48% in 2021) and
asset quality (i.e.: NPL ratio of 28% in 2017 vs 5.7% in 2021; Real Estate exposure of 4.8% in 2017 vs
1.8% in 2021).
2: Regarding the operational and financial results achieved in 2021, what would you underline?
In terms of operating results, two indicators stand out: i) €3bn of new credit origination, of which 60%
of corporate loans, and; ii) the unique and integrated experience provided to the client, namely with
more than 100 branches reshaped according to the new distribution model and the new brand, and the
increase in the penetration rate of active digital clients to 54% (vs 50% in 2020).
In 2021 we entered the route of
profitability and growth, and we are
prepared to grow in a sustainable
manner and to support companies
and the Portuguese economy.
ANTÓNIO RAMALHO
Chairman of Executive Board of Directors
Finally, I would like to stress the debut issue of €300mn senior preferred notes that took place in July
and which marked novobanco’s return to the capital markets.
In short, novobanco achieved in 2021 a net profit of €185mn, demonstrating its capacity to generate
capital and to grow by supporting the Portuguese economy.
3: You mention novobanco’s capacity to generate capital, operating with Capital Ratios above the
requirements. However, the recomposition of regulatory capital is one of the challenges faced by
novobanco. How will you address this challenge?
For all regulatory indicators in force, novobanco surpassed the requirements, namely with a CET 1 ratio
of 11.1%, a solvency ratio of 13.1%, and a MREL ratio above the requirement. In the case of Capital ratios,
the bank operates above the transitional ratios defined in the pandemic context. The restructuring
carried out in recent years and consequent normalisation of its activity, as shown in 2021, should allow
novobanco to create value, generate capital, and recompose the capital by its own means.
The operational performance underpinned the positive performance of financial results: i) net interest
income and fees and commissions grew by 3.5%, (to €856mn), with the former reflecting the reduction
in average deposit rates, the lower cost of long-term funding and the maintenance of the pricing policy;
ii) the simplification of the organisation and processes that allowed novobanco to boost efficiency
and achieve a commercial banking income per employee of €195k (vs €175k in 2020); and iii) the
normalisation of the cost of risk, at 60 bps (including Covid 19 related impairments).
4: In the new strategic plan novobanco presents itself as a customer-centric domestic bank. Which
key features would you highlight in the strategic plan?
The new strategic plan was developed in light of the macroeconomic challenges, the increasingly
competitive environment and the pace of change and disruption, to deliver an innovative quality
service to the clients. The client is the core of the strategy. Omnicality, the new distribution and
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESAnnual Report 2021 customer interaction model, together with innovative digital functionalities, will allow novobanco to
offer a differentiating experience and quality of service. In this context, novobanco also sees itself as a
partner bank, promoting an ecosystem of partnerships compatible with everyone’s needs and ensuring
convenience to clients when addressing their financial needs.
The second pillar of the strategic plan is simplification, with an efficiency plan based on levers such as
the robotic automation of processes, rationalisation and reorganisation, the new distribution model,
and digitisation.
Profitability and the appropriate risk profile, as the third pillar, seek to achieve the continuous
improvement of risk and governance models, improving asset quality, and the implementation of
capital allocation and risk optimisation models.
Last but not least, talent and innovation, and notably the implementation of a talent development
programme. This programme aims to make novobanco more agile, to leverage internal knowledge and
to implement disruptive initiatives aligned with the strategic objectives, simultaneously motivating
and recognising the qualities of its human capital.
5: Just as novobanco is starting a new cycle, the national economy, through the Recovery and
Resilience Plan (RRP), is also starting a set of reforms and investments aimed at restoring sustained
economic growth. What is the role of novobanco in this process?
After the successful implementation of the restructuring and legacy clean-up process, novobanco is
now in a stronger financial and capital position to support businesses and families. On the other hand,
the self-financing capacity and own funds level of Portuguese companies are today also more solid,
the result of the growth in exports and the deleveraging carried out over the last decade.
Unlike in the past, the banking sector, including novobanco, is not seeking to act in terms of the
capitalisation of companies, but rather to contribute to the development of borrowed capital, i.e., to
have a role in companies’ high standards and risk management policy, helping businessmen to take
decisions that enable the efficient and speedy application of funds.
Acting as a partner, novobanco has implemented measures such as support to ensure the effectiveness
of the application process (including rules, deadlines, forms to be submitted, alerts, etc.), and the
development of guarantee and complementary financing products, offering customised financing
solutions.
6: In light of the growing importance of the transition to a more sustainable economy, namely
involving the ECB’s climate stress tests in 2022, what is novobanco’s approach and outlook? How
can novobanco contribute to a more sustainable society?
As part of novobanco’s strategic plan, a new sustainability strategy is being defined for the three ESG
areas - Environment, Social and Governance. In this context, the framework of the ESG strategy is
developed in 3 phases. The first, mainly focused on the climate and the characteristics of the credit
portfolio and implementation of a portfolio strategy, aims to identify the exposures whose behaviour is
more geared to mitigating the associated risks, including climate risks. The next phase is to understand
how these analyses and conclusions can influence the risk management policy, access to capital markets
and the cost of funding and capital. Finally, the third phase concerns the contribution that financial
institutions, including novobanco, can set in motion with imagination and creativity, for example to
develop financing structures that better address the challenges of a sustainable society. One of the
examples is the circular economy - how can the banking system contribute to avoid surpluses, i.e.,
what financing instruments can it develop to promote more sustainable practices such as reusing the
components of any product, making it more dependent on the use of goods and less on amortisation.
A new culture and a new customer relationship rationale is needed, of which an example can be found
in the car industry where long-term rentals have more and more relevance versus the purchase of cars.
ESG is a new challenge that is reflected in the financial system, being prepared to adjust to these needs
and find appropriate solutions is a critical challenge for sustainable business growth.
7: The environment has clearly been the dimension under stronger focus in recent years. However,
the social dimension is progressively, and often due to climate action, deserving special attention.
What would you highlight in the Group’s performance in this area?
The results of our 2021 impact assessment show that the social issue is important for our various
stakeholders, and therefore it is a topic that deserves our best attention, and we will soon have news
in this regard. This year, the pandemic has once again had a negative effect on the health and safety
not only of our employees, but also of clients and the community in general, with sometimes serious
consequences on the labour market, and the Group never ceased to find solutions to deal with these
adversities. In the case of employees, we have maintained the home office system and added a new
support package for employees which includes the possibility of receiving in advance 50% of the
Christmas allowance, access to credit under special conditions to meet the needs for IT equipment
and training, and also free access to family coaching sessions and psychological support. As regards
our clients, we were once again present, being a partner in the most difficult moments, avoiding
bankruptcies and consequently more unemployment. At community level, we maintained our support
to various entities that voluntarily help their neighbour, having taken part in two major campaigns to
tackle the problems resulting from the pandemic.
Let me just add one more fact that I would like to highlight. To go through this ESG journey in 2021
we have redefined our sustainability governance model, a model implemented in two phases that will
allow an assessment and a structured approach to sustainability across the whole Group and which has
the full involvement of the Executive Board of Directors and the General and Supervisory Board.
8: To conclude this interview, would you like to leave a final message?
In 2021 we entered the route of profitability and growth, and we are prepared to grow in a sustainable
manner and to support companies and the Portuguese economy. We are entering a new cycle, also
based on a new brand image.
We have shown that it was worthwhile and that together we make the future, and so I would like to
end by thanking all employees, clients and all the governing bodies of the bank, with special emphasis
to the General and Supervisory Board for their commitment and trust in novobanco.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESAnnual Report 2021 Management Report
2021
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES Index
1. WHO WE ARE
2. OUR STRATEGY
3. OUR PERFORMANCE
4. CAPITAL, LIQUIDITY & RISK
5. CORPORATE GOVERNANCE
6. CONSOLIDATED FINANCIAL STATEMENTS AND FINAL NOTES
7. ALTERNATIVE PERFORMANCE MEASURES
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64
80
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Annual Report 2021
1.0
WHO
WE ARE
1.1 Novo Banco Group
1.2 Organisation
Ricardo Manuel Santos Freire
Retail South Department - Customers Assistant
Maria Inês Ferreira
Retail North Department - Senior Customer Assistant
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 1.1 Novo Banco Group
Novo Banco, S.A. (“novobanco” or “the bank”) together with the subsidiaries and equity holdings that make up the Novo Banco Group (“Group” or “novobanco Group”) is mainly active in the Portuguese banking
sector, in both corporate and retail segments, also developing activity in asset management. In addition, the bank has equity stakes in companies operating in venture capital, real estate, renting and corporate
services.
novobanco was born in 2014 upon the resolution of Banco Espírito Santo S.A. (“BES”). From the outset, novobanco has shown its resilience, overcoming the huge challenges resulting from its status as a transitional
bank and from the new commitments imposed by the European Commission for the sale, in October 2017, of 75% of the Resolution Fund’s holdings to Lone Star, through Nani Holdings S.G.P.S., S.A..
The first years of novobanco’s life laid the foundation for its renaissance in 2021:
2014
CREATION OF NOVO BANCO
2017
2020
END OF 2021
LONE STAR ACQUIRES 75% SHARE
CAPITAL OF NOVO BANCO
THE RESTRUCTURING CYCLE
Creation of NOVO BANCO following the
Resolution applied to BES by Banco de
Portugal
In the context of the sale, 33 new
commitments were imposed by the
European Commission, to be fulfilled by the
bank
The bank managed to reduce the legacy
exposure and delivering the commitments at
the same time, demonstrating its resilience
and performance capacity
At the time the shareholders were as
follows:
75% Lone Star Funds (through Nani
Holdings, S.G.P.S., S.A.)
25% Fundo de Resolução1
NEW PHASE OF RENOVATION AND
TRANSFORMATION
In the final stage of the restructuring cycle,
the bank enters a new phase as a commercial
bank with a strong presence in the corporate
segment and a close relationship with the
customer.
Shareholders at the signature of the present
report:
75% Lone Star Funds (through Nani
Holdings, S.G.P.S., S.A.)
23.44% Fundo de Resolução
1.56% Direcção-Geral do Tesouro e
Finanças
1. On December 15, 2021, novobanco approved a capital increase from the conversion of conversion rights related to fiscal year 2015 through the issue of 154,907,314 new common shares, representing 1.56% of the share capital, attributed to Portuguese State. Thus, at the date of this report,
novobanco is held 75% by Lone Star Funds (through Nani Holdings, S.G.P.S., S.A.), 23.44% by the Resolution Fund and 1.56% by the Portuguese State. See topic 6.1 Shareholder Structure for further information
2. Pending to be verified by the Monitoring Trustee
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES Legacy divestment carried out simultaneously with operational model optimization
Outstanding execution of balance sheet clean-up despite the challenging environment
REAL ESTATE EXPOSURE
(%)
4.7%
NPL AND COVERAGE RATIO
NPA AND COVERAGE RATIO
28.1%
56%
1.8%
2017
2021
2017
71%
5.7%
2021
23.0%
53%
2017
68%
6.7%
2021
NPL Ratio
Coverage
NPA Ratio
Coverage
Business recalibration, leading a smaller balance sheet, while maintaining the core business3:
INTERNATIONAL BRANCHES
(#)
OPTIMIZATION OF DOMESTIC BRANCH NETWORK
(#)
448
COST TO INCOME
(%)
75%
25
2017
1
2021
3. Cost-to-Income defined has Operational Costs divided by Commercial Banking Income
310
48%
2017
2021
2017
2021
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES Significant profitability turnaround and a successful transition to capital-accretive performance
NET INTEREST MARGIN
(%)
1.42%
COST TO RISK
(%)
3.91%
0.89%
2017
2021
2017
0.60%
2021
NET INCOME
(€mn)
2017
-2 298
184.5
2021
In this new phase, novobanco’s vision leverages its knowledge and strong presence in the corporate segment, defining its identity, principles and values.
A Portuguese, Professional, Partner and Proximate bank...
PORTUGUESE
A leading bank in Portugal, focused on national economic priorities, supporting families and businesses to thrive.
PROFISSIONAL
A relentless focus on products, services and capabilities devised to serve all-sized businesses, including professional retail customers and households.
PERSONALITY
PARTNER
Leveraging partnership ecosystems to support customers holistic needs to successfully face opportunities and challenges.
PROXIMATE
Prioritizing omnichannel operating models to deliver convenience and easy-to-bank experience as the pillar of our customer relationships.
… and is intrinsically anchored in the principles and values that guide the way to do business:
COLLABORATION
Collaborating with all stakeholders to reach better outcomes for customers and society.
DYNAMISM
Assuming continuous transformation, as expectations are evolving at exponential rates, and reinvention to remain relevant.
PRINCIPLES
AND VALUES
DIVERSITY
Reflecting the different needs of customers and employees in solutions and plans.
TRANSPARENCY
Remaining authentic and open exchanges of information across all stakeholders.
EMPATHY
Incorporating the voice of customers and society into the way we do business.
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES PEOPLE
BUSINESS
A team of professionals committed …
4 193
employees of Grupo novobanco
€754k
investment in training
and development
44
training hours (average)
per employee
...to supporting families, and driving Portuguese companies to innovate, reinvent, export…
1.4
million clients
96.0%
satisfied and very satisfied clients
– Retail
97.9%
satisfied and very satisfied clients
– Medium Enterprises
FINANCIAL RESOURCES
€24.9bn
Loans granted
€3.0bn
Loans origination in 2021
€27.3bn
Deposits
...and to turning great difficulties into great opportunities…
... using an omnichanel approach based on agile methodology,
TECHNOLOGY & EXPERIENCE
13
multidisciplinary agile teams
working on digital transformation
722
thousand active clients
in the digital channels
35.7%
of total sales are digital
to give back to community the support it has received.
SOCIETY
€1.6mn
in donations (42% Health Patronage;
33% Social Patronage; 16% Cultural
Patronage; 9% Training & Research)
16
paintings loaned in 2021, increasing
to 93 the works on permanent exhibition
in 36 Museums around the country
790
suppliers registered
(of which 99% domestic)
Supplier portal promotion program (suppliers
with turnover >10k to the group in 2020
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 1.1.1 Business Model
novobanco is a Portuguese universal bank that provides the full spectrum of financial products to individuals, corporate and institutional clients, serving the entire national territory, with a strong focus on servicing
and supporting the Portuguese business community.
novobanco business model is based on two main commercial banking segments: i) corporate; and ii) retail. In both segments, novobanco seeks to anticipate and respond to the needs of its clients through its offer
of innovative, effective and transparent banking products and services, based on high ethical and integrity standards and customer satisfaction assessment tools.
CORPORATE: A HISTORICAL KNOW-HOW IN THE SECTOR
RETAIL: A PARTNER FOR HOUSEHOLDS, WITH A WIDE RANGE OF PRODUCTS
Highlights: Main Product and Services Offering
CASH MANAGEMENT
LENDING
ACCOUNTS, CARDS & PAYMENTS
HOUSING LOANS
Special Accounts and Cards
Drafts, Factoring and Collection solutions
Payment Management
Working Capital financing and revenue
Accounts bundled for different needs;
anticipation solutions
Lending and guarantees
Leasing and Renting services
fully online opening
Strong authentication system;
functionalities incl: contactless, virtual
cards, MB Way (…)
Acquisition & maintenance works
Online loan submission
Special conditions for young and
non-resident
INSURANCE
HUMAN CAPITAL SOLUTIONS
SAVINGS AND INVESTMENT
INSURANCE
Property & Casualty insurance
Credit insurance
Small Business insurance
Euroticket and payment cards
Auto lending and renting
Individual insurance
Deposits & retirement accounts
Investment Funds, Unit linked, structured
deposits
Discretionary mgmt & advisory
Life Protection
Health and Property & Casualty
Special solutions for self employed workers
HELPING CLIENTS TO GO GLOBAL
ADVISORY SERVICE
SMALL BUSINESS
CONSUMER FINANCE
International Trade
Trade Finance
Support to export
RRP and Portugal 2030 finance partner
Sector specific solutions
Special Initiatives and fairs
Special small business accounts
Cash and payments management solutions
Multi-risk business insurance
Online simulation and submission
Credit insurance option with
unemployment and life coverage
POS lending partnership “Heypay”
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES Corporate segment includes SMEs and Large companies, being suppported by 2 corporate and 20 business centre
~1.4 MILLION CLIENTS1
CORPORATE BANKING
55%
Weight of corporate
credit in overall novobanco
portfolio (2021 YE)
58%
SMEs in Portugal that are
novobanco clients
(~12.3k; 2020 YE)
70%
Large corporates in Portugal
that are novobanco clients
(~1.3k; 2020 YE)
RETAIL BANKING2
Specialised, diversified and distinct product offering to meet client needs
In addition to the 311 branches, novobanco has an omnichannel approach
through helpdesk services, internet, phone and mobile banking
Universal product offering including life/non-life insurance and asset
management (through GNB Gestão de Ativos)
Deposits (€bn)
Gross Loans (€bn)
Small business
~20%
Affluent
~60%
Mass Market
~20%
~20%
~30%
~50%
MARKET SHARE3
20.2%
TRADE
FINANCE
15.6%
POS
14.4%
CORPORATE
LOANS
13.0%
ASSET
MGMT
9.5%
MORTGAGE
LOANS
9.5%
DEPOSITS
5.4%
CONSUMER
LOANS
(1) novobanco group clients, including Novobanco Açores and BEST ;
(2) December 31th 2021, End of Period; Affluent includes upper affluent (Singular); % calculated as a proxy of management data;
(3) December 2021 data; sources: Banco de Portugal, APS, APFIPP;
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES In addition to novobanco’s branches and corporate and business centres, the novobanco business model is also supported by:
novobanco dos Açores is the result of a strategic alliance
between novobanco (57.5%) and Santa Casa da Misericórdia de
Ponta Delgada (30%), which was joined by the Bensaude Group
(10%) and thirteen other Santa Casa da Misericórdia units from
all the Azores islands (2.5%).
novobanco dos Açores has as its mission to serve its clients
(individuals, companies and institutions) and the Azorean regional
economy. Its strategy relies on key competitive advantages
such as economic and financial strength, a culture of service to
the benefit of the population of the Azores, wide experience of
the local market and a strong tradition of close relationships with
the Clients.
Detailed information on the activity of novobanco dos Açores
available here: www.novobancodosacores.pt
Banco Best - Banco Eletrónico de Serviço Total, S.A. is a digital
platform that provides the whole range of products and services
of a universal bank, standing out for its strong technological
nature and open architecture business model, based on national
and international partnerships in the areas of Savings, Asset
Management and Trading.
Banco Best operates in all segments of retail banking, providing
a wide array of services ranging from banking solutions, savings,
investments, credit, and day-to-day financial management.
Banco Best’s business strategy
is especially competitive
when it comes to meeting the investment needs of a segment
of
innovative
financial services, not restricted to the domestic market, more
independent, diversified and sophisticated.
individual clients who seek and value more
Banco Best’s strong bet on innovation and dynamic management
of a wide network of national and international partners has been
key to assert its position as a digital Marketplace of investment
solutions: the bank distributes around 6,000 products -
Investment Funds, ETFs, Retirement Solutions, Capitalisation
Insurance, Discretionary Management, Robot Advisor, etc.
- managed by the most prestigious national and international
financial entities.
Technology is part of Banco Best’s DNA. The bank’s digital
channels - App and Website - give clients total autonomy in
their relationship with the bank and a pleasant and effortless
experience. Through the App and Website - which in 2021 had a
major upgrade - clients can, among others: open their account,
access information on the entire offer and use the various support
tools, monitor market indicators and manage their portfolio - buy
and sell, monitor returns -, perform the various operations and
fulfil general duties, such as updating data.
Detailed information on the activity of Banco Best available
here: www.bancobest.pt
GNB Gestão de Ativos is one of the national management
companies with the largest track record, and the quality of the
management of its products and services has been recognised
over the years both nationally and internationally. GNB Gestão
de Ativos offers financial products and services,
including
several types of funds – mutual funds, real estate funds and
pension funds - besides providing discretionary and portfolio
management services. As at December 2021, GNB Gestão de
Ativos had €9.9bn in assets under management in Portugal and
the Luxembourg.
Detailed information on the activity of GNB Gestão de Ativos
available here: www.gnbga.pt
16
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 1.1.2 Awards in 2021
novobanco elected Best Trade
Finance Bank in Portugal
novobanco was, for the third
consecutive year, the best Trade
Finance Provider in Portugal, by the
international magazine "Global
Finance".
novobanco remains the only
Portuguese bank in the Republic's
debt issue consortium
novobanco remains the only Portuguese
bank to be part of the international
consortium that will prepare the launch of
the Republic's first issue of the year.
novobanco thus maintains its benchmark
position in the international debt market.
novobanco elected "Best
Distributor Portugal" at the SRP
European Awards 2021
novobanco was awarded the "Best
Distributor Portugal" prize by Euromoney
Group's Structured Retail Products (SRP).
The solidity and consistency of its offer in
the area of Structured Products and the
work that has been developed in this area
over recent years are thus recognised at
international level.
NB Euro Bond was awarded by
the Refinitiv Lipper Fund
Awards 2021
The NB Euro Bond was awarded by the
Refinitiv Lipper Fund Awards 2021,
being considered the best Euro bond
fund marketed in Europe for the last 3,
5 and 10 years.
JAN
FEB
MAR
APR
NB Euro Bond, NB PPR and PPR
Vintage from GNB Gestão de Ativos
won APFIPP awards
GNB Gestão de Ativos funds, NB Euro Bond,
NB PPR/UCITS and PPR Vintage were
awarded in the category of Best Other Bond
Fund, in the category of Best Retirement
Savings Fund with Risk 4 and in the category
of Best Retirement Savings Fund with Risk 3,
respectively.
novobanco shortlisted for
Finovate Awards 2021
novobanco has qualified for the final
phase of the innovation awards in the
fintech industry, the Finovate Awards
2021, with a solution under the Phygital
initiative, the Remote Signature with
Unique Signature Number, which is
running for the prize for Solution with
Best Consumer Experience.
novobanco elected by Global
Finance "Best Sub-custodian
Bank 2021" in Portugal
novobanco was ranked the best bank
in the provision of Securities Custody
Services in Portugal for the 16th time
(2021) by the international magazine
Global Finance, in nineteen years of this
distinction.
SEP
AUG
JUN
The novobanco app is a
finalist in the Portugal Digital
Awards 2021
novobanco announces that the new
App of novobanco (former NB
smarter) is a finalist in the Portugal
Digital Awards 2021, among more
than 300 candidates.
NOV
GNBGA wins Best Bond Fund
Manager Award (Portugal) by
CFI.co
GNB Gestão de Ativos was awarded by
CFI.co - Capital Finance International the
prize for Best Bond Fund Manager
(Portugal) 2021, which once again
recognizes the performance of the
management company in the asset
management industry.
novobanco elected Best Trade Finance Bank in
Portugal
novobanco was, for the fourth consecutive year, the best
Trade Finance Provider in Portugal, by the international
magazine "Global Finance".
novobanco App wins Best UX/UI in Finance
Initiative at Banking Tech Awards 2021
DEC
17
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 1.1.3 Main Events in 2021
26 MARCH
Novo Banco Group Activity and
Results - 2020
5 APRIL
Novo Banco, S.A. informs on the sale of the Spanish
branch business
novobanco delivered €189.0mn of
adjusted recurrent income before taxes,
generated from a recurrent commercial
banking income of €787.8mn and
operating costs of €418.6mn.
novobanco announced that has signed an agreement with
ABANCA for the sale of its Spanish branch business. With this
agreement, novobanco divests its retail, private banking and
SME operations in Spain, including all 10 branches and
employees.
29 MAY
Novo Banco, S.A. informs about assumptions used to
measure the fair value of its stakes in the
Restructuring Funds
novobanco disclosed further information on underlying
quantitative indicators of fair value measurements of
novobanco stakes in the Restructuring Funds, classified at “level
3” (IFRS 13). This information complements the information
previously disclosed in the previous Annual Report.
31 MAY
Novo Banco, S.A. informs about 1Q21 consolidated
results
novobanco announced net profit of €70.7mn in the first quarter
of 2021 with the conclusion of the restructuring plan in 2020
leading to a turn-around in profitability, despite the current
pandemic.
7 JUNE
Novo Banco, S.A. informs about the Contingent
Capital Agreement
novobanco noted that it received on 4 June 2021 an
amount of €317.0 million under the Contingent Capital
Agreement (“CCA”) with relation to 2020 accounts.
23 JUNE
Novo Banco, S.A. informs about MREL
requirements
novobanco informed that it has been notified by the Bank
of Portugal of its Minimum Requirement for own funds and
Eligible Liabilities requirements, on a consolidated basis, as
determined by the Single Resolution Board, required from 1
January 2022 and from 1 January 2026.
MAR
APR
MAY
JUN
25 OCTOBER
Novo Banco announces its new image created with the
voice of employees
2 AUGUST
Novo Banco, S.A. informs about 1H21 consolidated
results
13 JULY
Novo Banco, S.A. informs about launch of senior
preferred debt
28 OCTOBER
Novo Banco, S.A. informs about 9M21 consolidated
results and Capital Markets Day
novobanco announced third consecutive profitable quarter with
net profit of €154.1mn in the 9M21. This performance includes
one-off negative effect of -€73.5mn (in 3Q21) from the liability
management exercise (“LME”), which will generate future savings.
novobanco announced second consecutive profitable
quarter with net profit of €137.7mn in the 1H21. This
significant turn-around in profitability demonstrates the
capacity of the business to consequently generate capital.
novobanco informed that it has launched a senior preferred
note in the amount of € 300 million, with a 3 year tenor and
the option of early redemption by the bank at the end of
year 2. The notes were subscribed at 100% price and have
an annual interest rate of 3.5% in the first 2 years, and
3-month Euribor plus a margin thereafter.
OCT
AUG
JUL
3 NOVEMBER
Novo Banco, S.A. informs about a decision of the
Arbitration Court
7 DECEMBER
Novo Banco, S.A. informs about prudential treatment of
CCA claims from year-end 2021 onwards
15 DECEMBER
Novo Banco, S.A. informs about capital increase by
conversion of conversion rights
23 DECEMBER
Novo Banco, S.A. informs about payment made by
Fundo de Resolução under the CCA
novobanco informed that the dispute between the Resolution
Fund and novobanco regarding the decision to fully implement
IFRS 9 was decided by the Arbitral Tribunal to its disadvantage.
30 NOVEMBER
Novo Banco, S.A. informs about the conclusion of the
sale of the Spanish branch business
novobanco informed that it has concluded the sale of its
Spanish branch business, announced on April 5th 2021, to
ABANCA.
novobanco informed that it has received a letter from the Joint
Supervisory Team noting that the claims under the CCA should
only be recognised as Common Equity Tier 1 item, for the
purpose of the own funds’ calculation, once such payment
occurs.
13 DECEMBER
Novo Banco, S.A. informs about issuance of senior
preferred debt
novobanco informed that it has issued a senior preferred note in
the amount of € 275 million, with maturity on September 15th
2023 and an early redemption option by the bank on September
15th 2022. The notes have an annual interest rate of 4.25%.
NOV
DEC
novobanco informed that following General Shareholders
Meeting, the capital increase arising from the conversion of
conversion rights relating to the 2015 fiscal year was
approved. The conversion rights were issued under the
special regime applicable to deferred tax assets approved by
Law No. 61/2014, of 26 August, as amended. The share
capital of novobanco increases to €6,054,907,314.
23 DECEMBER
Novo Banco, S.A. informs on Sale and Purchase
Agreement of NPL and related exposures
novobanco informed on a Sale and Purchase Agreement,
with a consortium of funds managed by West Invest UK
Limited Partnership and LX Investment Partners III S.À.R.L.
respectively, for the sale of its Project Orion (sale price
€64.7mn).
novobanco informed that it has received from Fundo de
Resolução a payment in the amount of €112mn related to
the 2020 Contingent Capital Agreement (“CCA”) call, which
was pending.
27 DECEMBER
Novo Banco, S.A. informs on Sale and Purchase
Agreement of NPL and related exposures
novobanco informed on a Sale and Purchase Agreement,
with an entity owned by companies affiliated with and
advised by AGG Capital Management Limited and Deva
Capital Management Company S.L.U., for the sale of its
Project Harvey (sale price €52.3mn).
At the date of signature of this report, the transaction was not
materialized given that the authorization condition from Fundo de
Resolução was not met.
18
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 1.2 ORGANISATION
1.2.1 Governance Model
novobanco ‘s management relies on a governance model that is unique and distinct if compared with systemic banks within the Portuguese financial sector. In line with international best practices in management,
and under the new shareholder structure, since 18 October 2017, the bank changed its governance model, having a General and Supervisory Board (GSB) and an Executive Board of Directors (EBD).
The GSB is responsible for regularly monitoring, advising and supervising the management of the bank and of the group companies, as well as for supervising EBD activities with regard to compliance with the
relevant regulatory requirements of banking activity. The GSB meets on a monthly basis, and its Chairman maintains regular communication and dialogue with the CEO. In its activity, the GSB is supported by
committees to which it delegates some of its powers: the Financial Affairs (Audit) Committee, the Risk Committee, the Compliance Committee, the Nomination Committee and the Remuneration Committee. The
Financial Affairs (Audit) Committee also has competencies under the terms of the Commercial Companies Code. These committees are chaired by independent members of the GSB and its composition complies
with the applicable legislation regarding the chairmanship and majority of independent members (when required).
The GSB has the responsibilities and powers provided for by law, by the Articles of Association and by its internal regulations, including the supervision of all matters related to risk management, compliance and
internal audit, as well as granting prior approval on relevant matters for novobanco, which are detailed in the Articles of Association.
The EBD is responsible for the management of the bank, for the definition of the general policies and strategic objectives, and for ensuring the running of the business in compliance with the rules and good banking
practices.
The governance model was designed to ensure monitoring of the bank’s activity and achievement of its strategic objectives:
GENERAL SHAREHOLDERS
MEETING
Statutory Auditor
Company Secretary
GENERAL AND
SUPERVISORY BOARD
EXECUTIVE BOARD
OF DIRECTORS
MONITORING
COMMITTEE
Risk Committee
Capital, Assets and Liabilities
Committee (CALCO)
Risk Committee
Compliance and Product
Committee
Internal Control
System Committee
Digital Transformation
Committee
Financial and Credit
Committee
Investment and Costs
Committee
Impairment Committee
Financial Affairs
(Audit) Committee
Non-Performing Assets
(NPA) Sub-committee
Sub Committe Risk Model
Remuneration Committee
Nomination Committee
Compliance Committee
Sub Committe
Operational Risk
Further information is provided in the Corporate Governance Report, namely points 5.2.3 General Supervisory Board and 5.2.4 Executive Board of Directors.
19
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES
1.2.2 Organisational structure
The composition of the corporate and statutory bodies, at the signature date of this Report, is as follows:
BOARD OF THE GENERAL MEETING
Chairman: Fernando Augusto de Sousa Ferreira
Vice-Chairwoman: Magdalena Ivanova Ilieva
Secretary: Mário Nuno de Almeida Martins Adegas
General and Supervisory Board (GSB)
Chairman
Vice-Chairman
Member
M/F
Independent
Date of 1st
appointment
Expiry date
GSB Seniority
Financial Affairs
Risk
Compliance
Nomination
Remuneration
•
Byron James Macbean Haynes
•
Karl-Gerhard Eick
Donald John Quintin
Kambiz Nourbakhsh
Mark Andrew Coker
Benjamin Friedrich Dickgiesser
John Ryan Herbert
Robert Alan Sherman
Carla Antunes da Silva
William Henry Newton
•
•
•
•
•
•
•
•
M
M
M
M
M
M
M
M
F
M
•
•
•
•
•
•
18-10-2017
31-12-2024
18-10-2017
31-12-2024
18-10-2017
31-12-2024
18-10-2017
31-12-2024
18-10-2017
31-12-2024
18-10-2017
31-12-2024
18-10-2017
31-12-2024
18-10-2017
31-12-2024
06-06-2018
31-12-2024
01-01-2021
31-12-2024
4
4
4
4
4
4
4
4
3
1
•
C
•
•
•
•
•
C
C
•
•
•
•
C
•
•
C
•
•
GSB COMMITTES
C - Chairman
Board diversity in several dimensions: age6, geo provenance, education & professional background7
GENDER & AGE
GEOGRAPHICAL PROVENANCE
EDUCATIONAL BACKGROUND
PROFESSIONAL BACKGROUND
Female
10
1
Male
9
10
4
2
3
1
>60
]50-60]
]40-50]
≤40
Portugal
10%
Austria
10%
Germany
20%
Gender
Age
6. As of December 31st 2021
7. STEM: science, technology, engineering and mathematics
Political Sc
10%
USA
30%
Consultancy
8%
Telcos
8%
STEM
20%
Law
20%
UK
30%
Business/
Economics
50%
Banking
42%
Investment
Banking
25%
Law
17%
20
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES EXECUTIVE BOARD OF DIRECTORS (EBD)
ANDRÉS BALTAR GARCIA
LUIS RIBEIRO
LUISA SOARES DA SILVA
ANTÓNIO RAMALHO
MARK BOURKE
RUI FONTES
21
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES Chairman
M/F
Date of 1st appointment
•
António Manuel Palma Ramalho
Chief Executive Officer
Mark George Bourke
Chief Financial Officer
Rui Miguel Dias Ribeiro Fontes
Chief Risk Officer
Luísa Marta Santos Soares da Silva Amaro de Matos
Chief Legal & Compliance Officer
Luís Miguel Alves Ribeiro
Chief Commercial Officer (Retail)
Andrés Baltar Garcia
Chief Commercial Officer Corporate)
M
M
M
F
M
M
18-10-2017*
04-03-2019
18-10-2017*
18-10-2017*
18-09-2018
01-12-2020
Expiry date
31-12-2024
31-12-2024
31-12-2024
31-12-2024
31-12-2024
31-12-2024
* Members of the board in the governance model previous to the sale of 75% stake to LoneStar.
EBD Seniority
Chairman of EBD Committes
Financial and Credit;
Digital Transformation;
Capital, Assets & Liabilities (CALCO);
Costs and Investments;
Risk; Internal Control System;
Impairment;
Compliance & Product;
4
3
4
4
3
1
Board diversity in several dimensions: age8, geo provenance, education & professional background
GENDER & AGE
GEOGRAPHICAL PROVENANCE
EDUCATIONAL BACKGROUND
PROFESSIONAL BACKGROUND
Spain
17%
Ireland
16%
Portugal
67%
Engineering
17%
Law
33%
Public Sector
14%
Law
14%
Business/
Economics
50%
Banking
72%
6
1
5
Female
Male
6
1
3
>60
]50-60]
2
]40-50]
Gender
Age
MONITORING COMMITTEE
Chairman: José Bracinha Vieira
Member: Carlos Miguel de Paula Martins Roballo
Member: Pedro Miguel Marques e Pereira
STATUTORY AUDITOR
Ernst & Young, Audit & Associados – SROC, S.A., registered in the Portuguese Securities Market Commission (“CMVM”) under number 20161480 and in the Portuguese Institute of Statutory Auditors (“OROC”)
under number 178, represented by António Filipe Dias da Fonseca Brás, registered in the CMVM under number 20161271 and in the OROC under number 1661, and by João Carlos Miguel Alves, as alternate statutory
auditor, registered in the CMVM under number 20160515 and in the OROC under number 896.
COMPANY SECRETARY
Mário Nuno de Almeida Martins Adegas
Ana Rita Amaral Tabuada Fidalgo (Alternate Secretary)
8. A 31 de dezembro de 2021
22
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 1.2.3 Human Capital
novobanco seeks to follow the best fair-process practices in decision-making, focusing not only on results but also on sustainability and involving the employees in the process of seeking results. The bank thus
endeavours to be aware of the needs and difficulties experienced by employees throughout their life cycle and to meet their expectations, so as to contribute to their full development and allow them to fully unlock
their potential and maintain their motivation.
EVOLUTION OF NUMBER OF EMPLOYEES
(#)
BREAKDOWN BY GENDER
(%)
-389
4 582
4 193
2020
2021
53%
Women
54%
47%
Men
46%
2020
2021
AVERAGE AGE OF EMPLOYEES
(# years)
AVERAGE SENIORITY OF EMPLOYEES
(# years)
+0.7
44.9
45.6
18.0
+0.7
18.7
2020
2021
2020
2021
23
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 2.0
OUR
STRATEGY
2.1 Overview
2.2 DGCOMP Commitments
Hernâni Oliveira
Rating Department - Senior Risk Analyst
24
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 2.1 OVERVIEW
With the beginning of a new phase, and with a new image, in October 2021, novobanco disclosed its new strategic plan to the capital market and the general public ( link: https://youtu.be/OuoVeFCSZy8 ).
The new brand started with a challenge: “Be the voice of change”. A challenge for all employees to take part in the creation of a more modern, more dynamic, more ours, visual identity, making it closer to a world
that is also in permanent transformation. The collective voice of novobanco was self-created from the individual voice of each employee and graphically expressed in sound waves.
The new strategic plan factors in the macroeconomic conditions brought about by the pandemic, such as economic growth that benefits from the Recovery and Resilience Plan (RRP), in a low interest rate
environment and with a challenging economic outlook. The initiatives implemented under the new strategic plan also aim to address the increasingly competitive environment in banking and financial services, and
the growing pace of change and disruption. Successfully implementing disruptive initiatives and adopting ecosystem business models is critical for novobanco to keep exceeding customer experience expectations
and maximising customer value, while maintaining profitable operations and ensuring capital efficiency.
novobanco’s strategic plan comprises 4 pillars ...
A universal
customer-centric bank
Simple & efficient
Profitable
and safe risk profile
Talent & innovation
Focus on customers needs offering a
disruptive value proposition
Leverage on simplification, process
reengineering and technology
Enhance risk decisioning models and
governance, improving asset quality
Develop our people & transform our
workforce, to foster an innovation culture
Omnichannel distribution of simple and
innovative products and services
Streamline organizational structure to
maximize effectiveness & flexibility
Disciplined risk-management, optimize capital
allocation and RWAs
Motivate & reward performance aligning
individual objectives to strategic goals
25
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES A universal customer-centric bank
A historical know-how in the Corporate sector aligned with development of enhanced and value-added products and services:
novobanco online empresas
Corporate digital transition
Investment Support Programs
EU funding
Trade Finance
Helping Clients to go Global
A new online service to simplify and support company's
Support clients to pursuit and implement opportunities
Strong presence in the Corporate Market, with particular
financial management on a daily basis, by being analytical and
predictive.
Designed to provide better user experience and enabling a
more intuitive navigation (eg: new main page, menus, search,
documentation and support).
Option to include a financial aggregator (including external
accounts), ensuring financial control and management of
payments.
driven by EU funding (RRP of €16.6bn; PT 2030 of €33.6bn),
enabling solutions towards a more digitalized, innovative,
sustainable and export-oriented economy.
Partnering with specialists to provide a wide range of
solutions: i) effectiveness of the application process; ii)
guarantees and complementing EU-funding by offering
tailored solutions; iii) bridge financing
focus on the exporting SMEs
Trade Finance market share1: >20% (+0.9pp YoY)
Supported by dedicated and specialized teams
E2E supply chain finance
Allowing customers to have integrated financing solutions
tailored to their end-to-end needs
(1) 11/2021 data; novobanco analysis; sources: Banco de Portugal, APS, APFIPP
A partner for households, providing within the Retail sector a wide range of products and focused on margin and value-add service, together with a new strategic approach to consumer loans set to accelerate
growth:
Home
Buying
Complete omnichannel: simulation to deed
Simpler, quicker & more transparent
Ecologically sustainable
MAIN FEATURES
1. “Approval in principle” & eligibility
2. Proposals: Save & manage
3. Online submission with documents upload
4. Documents: Dynamic checklist
Small
Business Finance
Fully Digital E2E credit for small businesses
within novobanco online
Focusing on fast onboarding,
time-to-decision and cash, increasing
customer satisfaction and internal efficiency
Time to cash under 48 hours
Safe, intuitive, paperless, w/ efficiency gains
>70,000 frequent users
~50%
~50%
of deeds with processes
originated through mobile
of the proposals submitted
online are new customers
- 40,000
liters of water with the
elimination of paper
50%
at decision level
efficiency gains
>80%
100%
front office
efficiency gains
back-office
efficiency gains
Consumer Finance
Joint-venture with Credibom, allowing the bank
to enter the segment of POS (point of sale)
credit;
novobanco brings to the JV an extensive
base of Medium and Small B2C companies,
targeting consumer electronic, home &
garden, consumer appliances, medical
treatment, eyewear (…);
Credibom brings its POS credit expertise
and operational model from origination, to
transformation, to recovery
5.9mM€
Portuguese consumer finance
origination in 2020 (source: BdP)
+300
+600
corporate relationship managers
with deep industry experience
companies w/ B2C operations
interested in POS credit facility
Investment
Advice
Dedicated platform w/ wide product range:
a personalised investment advice tool to
understand customer needs, product
knowledge and experience, risk appetite,
investment horizon and goals
Proposals submitted since inception (#)
~13 300
~8 900
~6 400
~2 800
~490
2020
1Q21
1H21
9M21
2021
Execution
ratio (%)
>60%
26
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES Serving customers with a full spectrum of channels with complementary roles:
OMNICHANNEL
PoS
A/VTMs
Web and Mobile
Contact Hub
E
L
O
R
Collect payments and
expand functionalities
to enable value-added
services
Increase speed,
convenience &
cost-effectiveness in
cash & equivalent
transactions at the
branch
Speed and convenience
for simple servicing and
sales, capture traffic
and cross-fertilize other
channels
Simple servicing, client
remote support to
self-served channels
and inside
sales/redirection to
other channels
Remote RM
& Mobile AC
Increase remote
servicing to mass to
industrialize relationship
and to affluent to steer
to lower cost-to-serve
channels
Branches &
corporate centers
Smaller network of
multi-format and
modular branches;
Promote retail and
commercial
collaboration via shared
spaces
Partners
Network of partners to
promote and expand
client acquisition
capabilities
DIGITAL
HUMAN REMOTE
FACE TO FACE
Providing an integrated customer experience leveraging on a new distribution/branch model and a best-in-class digital experience:
I
L
E
D
O
M
N
O
T
U
B
R
T
S
D
W
E
N
I
I
An innovative functional layout focused on customer relationship, including a distinctive
self-service, employee mobility and digital communication
>100 branches already refurbished
3-yr nationwide investment program of ~€120mn
Promote customer relationship and business innovation with permanent digital &
back-office support
Act as a driving force for a thriving economy by being a focal point for individuals and
companies
Objective fulfillment
in New branches
Evolution of Consumer touchpoints
5%
4%
4%
3%
2%
1%
1%
55% 51%
46%
32%
33%
7% 13%
2015
27%
23%
2017
41%
39%
15%
22%
34%
44%
29%
27%
15%
12%
55%
60%
2019
2021
I
E
C
N
E
R
E
P
X
E
L
A
T
G
D
I
I
+5pp
vs old branches
+20%
of mobile interactions YoY, leading to
“mobile digital first” strategy
54%
active digital clients
(+7% YoY; +4pp YoY)
Branch
ATM
Online
Mobile
27
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES
New channels, services and personalised customer experience allowed a rapid rise of digital, leading to +165% YoY increase in the share of digital sales (retail sales excluding term-deposits) and unlocking its
potential going forward.
ONLINE CREDIT
FOR BUSINESS
FINANCIAL
AGREEGATOR
HOMEBUYING
LIFE
INSURANCE
1st E2E integrated digital
Business Financial advisor
From simulation to deed
Simulation and
credit solution for business
Analytic & predictive
Simpler, quicker & more
transparent
Ecologically sustainable
subscription of life insurance
on digital channels is made
available, offering an
omni-channel experience
PHYGITAL
Available across the
retail network, with
~40% operations
coverage, saving +13
tons of paper in 2021
APR 19
JUL 20
SEP 20
OCT 20
NOV 20
DEC 20 MAR 21
JUL 21
DEC 21
DIGITAL ACCOUNT
OPENING
DIGITAL ACCOUNT
OPENING
APP:
SMARTER
INVESTMENT
FUNDS
NEW
WEBSITE
NOVOBANCO
ONLINE
EMPRESAS
Launch of the account
Launch of the video call
opening using Digital
Key Mobile solution
account opening solution
Adaptable, customizable,
inclusive & predictive
(based on data science)
Subscription of third-party
funds through digital
channels extended;
Morningstar app solution
made available to
customers
More customization,
SEO and new features;
Launch of online store
for non-financial
products
New version of
NBnetwork
Increased user
experience, more
intuitive navigation
and new functionalities
Simple & efficient
Implementation of accretive commercial operations leveraged by highly efficient operations, through a cost efficiency plan based on 4 levers that play a key role in novobanco distinctive value-proposition.
ROBOTIC PROCESS AUTOMATION
Reduce of human error
Reduce time needed to execute tasks / SLAs
Flexibility: execution at non-critical hours
Implementation of extra-controls
Extra time for high-valued activities
E2E: RATIONALIZATION & REORGANIZATION
Rationalization initiatives (examples):
Replace physical mail by digital communication;
Contracts renegotiation (ie: archive & feeds)
Reorganization of processes (examples):
Classification of IT projects by nature;
~50 RPAs
implemented
Bankcard: Activation
>550 processes per day
Prioritization of projects based on impact in revenues and costs;
Corporate: upload of financial statements
>50 processes per day
Towards a leaner organization, more efficient and customer-centric.
NEW DISTRIBUTION MODEL
DIGITALIZATION
28
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES Profitable and safe risk profile
Implementing enhanced risk decisioning models improving profitability and asset quality:
ENHANCED RISK DECISIONING MODELS
DISCIPLINED RISK-MANAGEMENT AND CAPITAL ALLOCATION
Maximize the obtainment of real credit guarantees ensuring the complete characterization in the
New Capital allocation model to determine each segment profitability (with strategic implications)
system
Dynamic allocation of balance sheet growth between different segments and its capital impact
Ensure the periodic update of the characteristics of the guarantees received (ie: valuations, real
estate insurance policies)
Pricing of new loans is subject to RAROC hurdles
Reduce capital consumption by guaranteeing on-time availability of corporate client’s most recent
Leading to:
financial statements and other qualitative information
Disposal of Spanish operations (YE21)
Disposal of stakes with high RWA density
Talent & innovation
Implementing a new employee value proposition and talent development program for a renewed workforce:
NEW TRAINING PROGRAM
NEW LEADERSHIP MODEL
TALENT LAB CHALLENGE – 2021 EDITION
To upgrade knowledge of Regulatory,
Functional, Leadership and Digital
Complement the new distribution models
and the omni-channel approach
Aiming a more agile organization
Talent & Innovation program – from
ideation, MVP and delivery; developing
employees disruptive ideas aligned with
strategy goals;
MORE FUNCTIONAL OFFICES
TALENT MANAGEMENT PLAN
Aiming to increased productivity
New forms of organization and working
models adapted to new spaces (ie: new
headquarters; new branches, business
centers)
Developing a new career journey, to
attract talent and promotes diversity
Technical vs management career with
defined requirement/skills
Internal challenge to innovate while leveraging on employees' insights and diversity the perspectives
that executives are exposed to.
> 30 ideas selected and evaluated after each pitch
> 10 ideas integrated into an intrapreneurship program and the remaining integrated into ongoing
initiatives
1
2
3
Promote
Circular Economy
Opportunities to be captured from the migration of the current
business models to the “product as a service” model?
Supporting clients
in ESG transition
How to support corporate clients in their business transition strategy
to become compliant with ESG principles?
Customized services
and products
How to customized the offer and predict the best moment to offer
solutions to satisfy its customers' needs?
29
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES … with clear financial objectives and targets:
A UNIVERSAL CUSTOMER-CENTRIC BANK
SIMPLE AND EFFICIENT
PROFITABLE AND SAFE RISK PROFILE
TALENT & INNOVATION
COMMERCIAL LOAN BOOK (PERFORMING)
€23bn
€23.2bn
2-3% per year
LEVERAGING ON EXPERTISE & DIFFERENTIATION
2020
2021
MEDIUM-TERM TARGETS
NET INTEREST MARGIN
1.41%
1.42%
[1.30 – 1.50%]
SAFEGUARD INCOME
COST-TO-INCOME
53%
48%
< 45%
EFFICIENT OPERATIONS
CoR
208pbs
60pbs
< 50 bps
ACHIEVE MODERATE RISK PROFILE
NPL RATIO
8.9%
5.7%
< 5%
CONVERGING TOWARDS EU AVERAGE
ROTE (PRE-TAX)1
6%
8.8%
≥ 10%
DELIVER ATTRACTIVE RETURNS
CET1
10.9%
11.1%
> 12%
ENHANCE CAPITAL POSITION
(1) 2020 RoTE considers recurrent activity only; Considers Underlying profitability pre-tax deducted by special tax on Banks and contributions to resolution funds
30
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 2.2 DGCOMP9 COMMITMENTS
TARGETS FULLY ACHIEVED10
In the letter of commitment entered into in October 2017 by the Portuguese State and the European Commission in connection to the process of state aid to novobanco in the context of the sale of 75% of the
bank’s share capital to Lone Star, 2021 was set as the year of the end of the restructuring period.
These commitments are divided into three categories, and compliance therewith was being closely monitored and confirmed by the Monitoring Trustee appointed by the European Commission:
Structural commitments
Behavioural commitments
Viability commitments
Namely the divestment commitments in various geographies and
businesses and the reduction of the bank's non-core assets, which
included divestment of the insurance business - GNB Seguros -,
concluded this year.
Namely the establishment of ROE (Return on Equity) based
pricing tools subject to defined minimum limits, restrictions on
acquisitions, dividend distribution ban, ban on the exercise of
voting rights by the minority shareholder (the Resolution Fund)
and caps (of 10x the bank's average salary) on the remuneration
of any employee or member of the bank's corporate bodies11.
interim targets and 2021 targets, notably Full Time equivalent
(FTE) reduction targets, branch reduction targets, and
Cost-to-Income targets, and the reinforcement of risk
management policies, already carried out.
In the commitment letter and in the business plan submitted by the buyer - which served as the basis for the viability commitments established by the European Commission - it is made clear that the CCA assets
on the balance sheet would be cleaned by the end of 2020, with 2021 as the year from which the viability of the bank would have to be proven.
Faithful to the commitments’ basic business plan intrinsic, and despite real market conditions being much worse than projected in Lone Star’s business plan - both in terms of the evolution of Euribor rates, and
because it did not consider the result of the very negative economic repercussions of the pandemic crisis - novobanco demonstrated, in 2021, its viability, both by systematically posting positive results in all
quarters of the year and through the success of the MREL issues made to meet the interim targets imposed by the Single Resolution Board for 1 January 2022.
Although at the closing date of this Report confirmation has not yet been obtained from the Monitoring Trustee, whose report for 2021 will only be delivered in the second quarter of 2022, the bank considers that
the objectives imposed for 2021 should be considered fulfilled, including the objective of the Pre-Provision Income, which value fixed in 2017 for the year 2021 had been established based on market assumptions
much more favourable than those that actually prevailed.
9. Directorate-General Competition – European Commission
10. Pending the Monitoring Trustee’s certification
11. In view of the fulfilment of the commitments for 2019, this latter restriction ceased to be effective in July 2020.
31
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 3.0
OUR
PERFORMANCE
3.1 Economic Context
3.2 Highlights
3.3 Novo Banco Group
3.4 Business Segments
3.5 Novo Banco Separate
3.6 Relevant Facts from the Activity and Subsequent Events
3.7 Main Risks and Uncertainties
Maria da Conceição Lopes Xavier
Operations Departament - Technician Assistant
Alexandre Fachada
Operations Departament - Operations Assistant
32
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 3.1 ECONOMIC CONTEXT
The year 2021 was marked by a recovery in global economic activity. After a 3.5% contraction in 2020,
global GDP grew by 5.9% in 2021 as a whole. With the cumulative number of Covid-19 cases rising from
84 million to close to 288 million, especially with the spread of the new delta and omicron variants, the
pandemic continued to subdue the behaviour of economic players. Even so, consumers and businesses
showed an increasing capacity to adapt to the “Covid economy”. Progress in vaccination, the gradual
easing of restrictions on mobility and activity and aggressive monetary and fiscal policy stimuli
supported growth, albeit unevenly across economies and with signs of deceleration in the second half
of the year.
The US economy grew by 5.7% in 2021 (-3.4% in 2020), with the expansion in demand supported by
the release of savings accumulated during the lock-down and by fiscal support to households. The
household savings rate retreated from a high of 26% of disposable income in April 2021 to 6.9% at year-
end. In China, economic activity expanded by 8.1% in 2021 (2.3% in 2020), slowing down throughout
the year due to Covid-19 restrictions, problems with global supply chains and constraints caused by
the scarcity and the cost of energy. Activity was also restrained by increased regulatory pressure from
the authorities, with particularly acute effects on the real estate sector. In the Euro Zone, GDP grew by
5.2% in 2021 (-6.4% in 2020), underpinned by the normalisation trend in activity and the recovery in
demand. However, growth was conditioned by delays in vaccination and the reopening of activity at
the start of the year, with some economies being more exposed to the sectors most penalised by the
pandemic, such as tourism and hospitality. In the Eurozone, the household savings rate retreated from
a high of 25% of disposable income in the 2Q 2020 to 15% in the 3Q 2021.
ANNUAL RATE OF CHANGE OF GDP
(%; Source: IMF, INE)
5.9
5.7
3.5
8.1
2.3
INFLATION RATE
(%; Source: Bloomberg, Eurostat)
7.0
5.2
4.9
-3.4
1.4
-6.4
-8.4
Global
US
China
Euro Area
Portugal
US
2020
2021
2020
2021
5.0
-0.3
Euro Area
33
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 2021 was also marked by an increase in inflationary pressures, with the strong expansion of demand
meeting with constraints in global supply chains and production activity, including shortages of labour,
raw materials and intermediate consumption, logistical disruptions caused by delays in the transport of
goods, a significant increase in energy costs, and forced production stoppages. The price of oil (Brent)
rose by 50.2% in the year, to $77.8/barrel. In Europe, the price of natural gas spiked by 268%, driven by
a strong increase in global demand in a context of unfavourable weather conditions and lower-than-
expected wind power production. Supply was lower than normal, reflecting the fall in the supply of gas
from Russia, the reduction in stocks and the effects of under-investment in production capacity. The
imbalance between supply and demand and the increase in energy costs drove up inflation. The year-
on-year change in producer prices accelerated from 1.6% to 9.6% in the US and from 0.4% to 23.7% in
the Eurozone (with the rise in energy costs weighing more in Europe). Businesses partly passed on the
increase in production costs to final prices, pushing up consumer price inflation from 1.4% to 7% in the
US and from -0.3% to 5% in the Eurozone.
The main Central Banks perceived these developments as an essentially transitory phenomenon.
However, recognising the risk of persisting higher inflation, several institutions initiated or signalled
an easing of monetary stimuli. In the Euro Zone, the ECB kept benchmark interest rates unchanged
(deposit facility rate at -0.5%). Yet, in September, it recalibrated downwards the monthly pace of
purchases of debt securities under the pandemic emergency programme (PEPP) and, in December,
confirmed the end of its net purchases of assets in March 2022. At the end of the year, the American
Federal Reserve stopped classifying inflation as transitory and, as a result, stepped up the reduction
of the monthly pace of asset purchases and signalled three 25 bps hikes in the fed funds target rate
for 2022. Other central banks moderated their purchases of assets and/or initiated cycles of rising key
rates.
Although with some intra-annual oscillations, the 3-month Euribor closed the year slightly below its
level at the beginning of 2020, at -0.572%. This decline reflected the ECB’s relatively more dovish
stance compared with other central banks. But the recovery in growth, the rise in inflation expectations
and the expected tapering of monetary stimuli have translated into a rise in long-term market interest
rates, especially as from August. The 10-year Treasury yield rose from 0.91% to 1.51% (with a spike of
over 1.74% in March). In the Eurozone, the Bund yield for the same maturity increased from -0.569%
to -0.177%. In this context, the year-end was marked by a flattening of the yield curve (10Y-2Y) in the
US and the Eurozone. The euro lost 6.9% against the dollar in 2021, to €/$1.137, with the US currency
benefiting from the more dynamic US economy and the Fed’s relatively more hawkish stance.
EVOLUTION OF PUBLIC DEBT YIELDS 10YR
(%; Source: Bloomberg)
EVOLUTION OF STOCK MARKET INDEX
(January 2019 = 100; Source: Bloomberg)
3.4
3.0
2.6
2.2
1.8
1.4
1.0
0.6
0.2
-0.2
-0.6
-1.0
2014
2016
2018
2020
US
1.51
190
170
150
130
Germany -0.18
110
Shanghai Composite
S&P 500
Dow Jones
Euro Stoxx
600
90
70
2019
DAX
2020
2021
2022
34
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES The upturn in growth and the environment of ample liquidity provided by expansionary monetary policies
supported a value increase in risk assets in 2021. On the equity market, the main indices registered
significant gains, notwithstanding an increase in volatility at the end of the year, due to rising inflation
and market interest rates. In the US, the S&P 500 and the Nasdaq advanced by 26.9% and 21.4%,
respectively. In Europe, the Euro Stoxx and DAX gained 22.3% and 15.8%. In Portugal, the PSI-20 was
up by 13.7%. Favourable financing conditions and risk propensity also benefited other asset classes.
The credit market saw a narrowing of spreads, despite a sharp increase in corporate debt issues. The
context of low yields also favoured investment in alternative assets, including commodities, private
debt, digital assets and real estate, among others. Housing prices extended the growth trend already
observed in 2020, with the most recent records pointing to year-on-year increases of 18.4% in the US,
4.7% in China and 6.8% in the Eurozone.
In Portugal, the economy remained constrained by Covid-19, suffering the effects of a new lock-down
in Q1 that led to a contraction of GDP. Activity visibly recovered in the following quarters, though
remaining below pre-Covid levels. In the full year, GDP grew by 4.9% in real terms (-8.4% in 2020),
with contributions of 3.1 p.p. from domestic demand and 1.6 p.p. from net external demand. Private
consumption grew by 5.1%, driven by the rise in disposable income and the reduction in the household
savings rate, which allowed making expenses that had been postponed by the confinement. The
household savings rate retreated from 12.8% to 10.6% of disposable income, still above its level in
2019 (7.2%). Gross fixed capital formation grew by 4.9% in 2021, in line with the recovery in demand
and benefiting, in the second half of the year, from the inflow of European funds. Corporate capital
expenditure was, however, restricted by disruptions in the supply chains, which penalised industrial
production. Industrial production grew by 2.4% in the year, though remaining below pre-Covid levels.
The same disruptions affected the growth of exports, which nevertheless grew by 9.5% in 2021.
Foreign sales of goods bounced back to the levels observed before the pandemic, but the same cannot
be said for exports of services, still penalised by the impacts of Covid-19 on tourism. In this sector,
progress in vaccination and the reopening of the economy allowed a relatively strong recovery in
domestic demand. Overnight stays by residents in tourist establishments rose by 36% year-on-year,
which is around 10% below 2019 levels. Overnight stays by non-residents increased by 45% compared
to 2020, but remained 63% below 2019 levels.
Temporary business and labour market support measures, including the simplified layoff scheme, gradual
support for business recovery and loan moratoria (ending in September), mitigated the economic
impacts of the pandemic. The unemployment rate retreated from 7% to 6.6% of the labour force. The
real estate sector proved resilient, with house prices rising by 8.3% in average annual terms, which is
close to their growth in 2020. Average annual inflation rose from 0% to 1.3% (1.7% in goods and 0.6%
in services), with the year-on-year change in prices reaching 2.7% in December. This movement was
mainly driven by the increases in energy and food prices, which rose year-on-year by 11.2% and 3.2%,
respectively. The yield on the Portuguese 10-year treasury bonds rose from 0.03% to 0.465%, with
the spread vs. the Bund widening by 4 bps only, to 64 bps.
EVOLUTION OF THE HOUSING PRICE INDEX IN PORTUGAL
(% of average annual change rate; Source: INE)
EVOLUTION OF UNEMPLOYMENT RATE IN PORTUGAL
(% of active population; Source: INE)
7.1
4.2
3.1
9.2
10.3
9.6
8.4
8.3
-1.9
-4.9
-7.1
18
16
14
12
10
8
6
4
2
0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2010
2012
2014
2016
2018
2020
6.6
35
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 2022 should be marked by continued global economic growth above pre-Covid records, but
decelerating compared to 2021. Base effects will tend to be less favourable and monetary and fiscal
policy stimuli less intense, with the main central banks raising benchmark interest rates (US) or reducing
asset purchases (Eurozone). Growth should stem from a gradual normalisation of economic activity,
with Covid-19 evolving from pandemic to endemic and activity in services recovering more visibly. The
moderation of demand and some improvement in supply constraints should allow for moderation in
inflation, especially in the second half of the year.
In any case, some increase in market interest rates is expected. For Portugal, a slight acceleration of
activity is expected in 2022, with GDP growing by around 5.6%. This is explained by the recovery profile
of the tourism activity, benefiting exports, and by the first impacts of the Recovery and Resilience
Plan on domestic demand, supporting investment. Overall, the main negative risks include a longer
persistence of inflation, forcing more aggressive interest rate hikes than expected by central banks.
Tighter monetary and financial conditions could lead to a revaluation of assets in the financial and real
estate markets, penalising investor confidence. New and more disruptive waves of the pandemic could
delay the normalisation of supply chains. Higher than expected energy price increases could penalise
production and consumption. Confidence and spending propensity may be constrained by uncertainty
and instability generated by political events. The evolution of economic activity will also be conditioned
by some structural trends, including, among others, digitisation and automation, the energy transition,
and new consumption habits and demands.
3.2 HIGHLIGHTS
HIGHLIGHTS
FIRST YEAR-END WITH POSITIVE PROFITABILITY
• Commercial banking income, comprising Net interest income (+3.3% YoY) plus Fees and
commissions (+3.9% YoY), increased 3.5% YoY to €855.9mn in 2021 (1Q21: €208.5mn; 2Q21:
€216.3mn; 3Q21: €213.2mn; 4Q21: €217.9mn). The improvement in net interest income reflects
the reduction in average deposit rates, the lower cost of long-term financing and the maintenance
of the pricing discipline.
• The Bank’s core operating income (commercial banking income minus operating costs) increased
to €447.6mn (+13.3%; +€52.4mn YoY), driven both by improved commercial banking income and
reduced operating costs (-5.4%; -€23.5mn YoY), as a result of continued digital investment and
operational optimisation.
• Further improvement of Cost to Income ratio, excluding markets and other operating results,
reaching 47.7% (vs 52.2% in 2020);
• Credit impairments for credit totalled €149.4mn, including €71.8mn impairments for Covid-19
related risks, a YoY reduction of -71.5% or -€375.1mn. The cost of risk was 60bp, or 31 bps
excluding impairments for Covid-19 related risks, demonstrating the successful ongoing de-risking
strategy of the portfolio.
SOLID BUSINESS MODEL WITH RESILIENT LENDING AND DEPOSITS
GROWTH
• Net customer loans at €23.7bn, broadly stable across corporate, mortgage and consumer loan
portfolio, also taking into account NPL disposals during the year;
• Total customer funds increased by +6.6% YTD, with customer deposits increasing by 4.7%
(+€1,222mn), reflecting the continued confidence of clients in novobanco;
• The continuous investment in digitalisation, set to provide a unique omnichannel customer
experience based on the new distribution model and digital transformation, led to an increase by
7% YoY in active digital customers to 54.4% of total customer as of December 2021 and to a
significant increase in the number of products sold through the digital channels (+165% YoY;
excluding deposits, which traditionally have high digital penetration). The increased importance of
digital in sales was particularly visible in Consumer loans (+238% YoY to 1.1k loans granted digitally;
6% of total sales vs 2% in 2020) and Investment Funds (+231% YoY to 28.2k units; 27% of total
sales vs 14.7% in 2020);
• Continued reduction of the non-performing loans (NPL) ratio to 5.7% (Dec/20: 8.9%), with a
coverage ratio of 71.4%, demonstrating the continued de-risking of the balance sheet and reflecting
progress towards achieving an NPL ratio in line with European average.
• novobanco announces an annual net profit of €184.5mn (vs -€1,329.3mn in 2020). This
achievement represents the first annual positive net income of the Group since its creation, an
important milestone for the end of the restructuring process initiated in 2017.
In 2021, underlying net income (pre-tax) would be €282.7mn, equivalent to 8.8% RoTE (Return on
Tangible Equity; pre-tax).
STABLE CAPITAL RATIOS AND LIQUIDITY RATIO
The Bank is well positioned to continue to support households and corporate customers, with a CET
1 ratio of 11.1% (total capital ratio of 13.1%), liquidity ratio (LCR) of 182% and NSFR of 117%, as of 31
December 2021.
36
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES MAIN HIGHLIGHTS
ACTIVITY (mn€)
Net Assets
Customer Loans (gross)
Customer Deposits
Equity
SOLVENCY (3)
Common EquityTier I / Risk Weighted Assets.
Tier I / Risk Weighted Assets
Total Capital / Risk Weighted Assets (3)
Leverage Ratio
LIQUIDITY (mn€)
European Central Bank Funding (2)
Eligible Assets for Repo Operations (ECB and others), net of haircut
(Total Credit - Credit Provision) / Customer Deposits (1)
Liquidity Coverage Ratio (LCR)
Net Stable Funding Ratio (NSFR)
ASSET QUALITY
Overdue Loans > 90 days / Customer Loans (gross)
Non-Performing Loans (NPL) / (Customer Loans + Deposits with banks and Loans and advances to banks)
Credit Provision / Overdue Loans > 90 days
Credit Provision / Customer Loans (gross)
Cost of Risk
PROFITABILITY
Net Income for the Period (mn€)
Income before Taxes and Non-controlling interests / Average Net Assets (1)
Banking Income / Average Net Assets (1)
Income before Taxes and Non-controlling interests / Average Equity (1)
EFFICIENCY
Operating Costs / Banking Income (1)
Operating Costs / Commercial Banking Income
Staff Costs / Banking Income (1)
EMPLOYEES (No.)
Total
-Domestic
-International
BRANCH NETWORK (No.)
Total
-Domestic
-International
(1) According to Banco de Portugal Instruction n. 16/2004, in its version in force
(2) Includes funds from and placements with the ESCB; positive = net borrowing; negative = net lending
(3) Preliminary
(4) Updated values
31-Dec-21
31-Dec-20
44 619
24 932
27 315
3 149
11.1%
11.1%
13.1%
6.0%
2 742
16 476
86%
182%
117%
1.2%
5.7%
430.2%
5.0%
0.60%
184.5
0.5%
2.9%
7.1%
42.0%
47.7%
24.0%
4 193
4 165
28
311
310
1
44 396
25 217
26 093
3 147
10.9%(4)
10.9%(4)
12.8%(4)
6.2%(4)
4 740
16 684
90%
140%(4)
112%(4)
2.4%
8.9%
262.2%
6.3%
2.08%
-1329.3
-2.9%
1.4%
-32.0%
69.9%
52.2%
52.2%
4 582
4 560
22
359
358
1
37
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 3.3 NOVO BANCO GROUP (CONSOLIDATED)
3.3.1 Results
At the end of 2021, novobanco reported a profit of €184.5mn (+€1,513.8mn YoY). The change in
profit is driven by (i) the improvement in the Bank’s operating income (+€377.7mn), (ii) the lower level
of impairments and provisions (-70.4%; -€838.7mn) and (iii) the recognition in 2020 of the loss of
€300.2m in the revaluation of the Restructuring Funds.
In 2021 the underlying net income (pre-tax) would be €282.7mn, equivalent to a RoTE (Return on
Tangible Equity; pre-tax) of 8.8%. The underlying net income (pre-tax) is net of special tax on Banks,
and excludes market results and the extraordinary effects of the debt buyback (LME), the change in
the pension fund actuarial calculation methodology, Covid provisions and other provisions, including
a contingent liability resulting from the change to the real estate tax introduced by the 2021 State
budget.
INCOME STATEMENT
Net Interest Income
Fees and Commissions
Commercial Banking Income
Capital Markets Results
Other Operating Results
Banking Income
Operating Costs
Net Operating Income
Restructuring funds - independent valuation
Net Impairments and Provisions
Credit
Securities
Other Assets and Contingencies
Income before Taxes
Corporate Income Tax
Special Tax on Banks
Income after Taxes
Non-Controlling Interests
Net Income for the period
31-Dec-21
31-Dec-20
absolute
Change
573.4
282.5
855.9
75.9
40.4
972.2
408.4
563.8
-
352.7
149.4
47.8
155.6
211.1
-15.2
34.1
192.2
7.7
184.5
555.1
271.9
827.0
-72.5
-136.6
617.9
431.8
186.1
-300.2
1 191.5
524.4
41.0
626.0
-1 305.6
1.1
32.8
-1 339.4
-10.1
-1 329.3
18.3
10.6
28.9
148.4
177.0
354.3
-23.5
377.7
300.2
-838.7
-375.1
6.8
-470.4
1 516.8
-16.3
1.3
1 531.6
17.8
1 513.8
mn€
%
3.3%
3.9%
3.5%
...
...
57.3%
-5.4%
...
100.0%
-70.4%
-71.5%
16.5%
-75.1%
...
...
4.1%
...
...
...
38
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES INCOME STATEMENT
Net Interest Income
Fees and Commissions
Commercial Banking Income
Market Results
Other Operating Results
Banking Income
Operating Costs
Net Operating Income
Restructuring funds - independent valuation
Net Impairments and Provisions
Credit
Securities
Other Assets and Contingencies
Income before Taxes
Taxes
Special Tax on Banks
Income after Taxes
Non-controlling Interests
Net Income
Income before Taxes
Special tax on Banks
Market Results
LME one-off
Pension Fund
Covid Provisions
Other one-off provisions
Underlying Income Before Tax
QoQ Change
absolute
2.3
2.3
4.6
101.9
8.9
115.4
1.1
114.3
0.0
122.7
4.1
29.0
89.6
-8.4
-20.1
-0.1
11.9
-2.2
14.1
mn€
%
1.6%
3.2%
2.2%
...
29.3%
62.8%
1.0%
...
...
...
13.5%
...
...
-70.4%
...
...
59.4%
-61.4%
86.0%
1Q21
145.7
62.8
208.5
52.8
12.2
273.5
102.7
170.8
0.0
61.8
54.9
0.9
6.0
109.0
4.2
32.8
72.0
1.3
70.7
109.0
-32.8
-52.5
0.0
0.0
21.8
10.0
55.5
2Q21
72.8
216.3
40.5
-41.3
215.5
101.4
114.1
0.0
27.4
29.8
15.1
-17.5
86.7
16.9
1.5
68.4
1.4
67.0
86.7
-1.5
-35.4
0.0
0.0
13.4
0.0
63.3
3Q21
140.9
72.3
213.2
-59.7
30.3
183.9
101.6
82.3
0.0
70.4
30.3
1.4
38.7
11.9
-8.1
0.0
20.0
3.6
16.4
11.9
0.0
-11.1
73.5
0.0
5.0
0.0
79.3
4Q21
143.2
74.6
217.9
42.2
39.2
299.3
102.6
196.6
0.0
193.1
34.4
30.4
128.4
3.5
-28.2
-0.1
31.8
1.4
30.4
3.5
0.1
-39.2
0.0
-37.2
31.6
125.9
84.8
In 2021, novobanco Group generated positive net income in all quarters, with quarter-on-quarter
progress when excluding the extraordinary charges.
Key features of the activity in the year are the following:
•
Increase in commercial banking income, which amounted to €855.9mn (+3.5%; +€28.9mn YoY),
driven by higher net interest income (+3.3%; +€18.3mn YoY), and an improvement in fees and
commissions (+3.9%; +€10.6mn YoY);
• Capital markets results of +€75.9mn in 2021 mostly due to gains from the hedging of interest rate
risk, which offset the negative impact (-€73.5mn) of the LME performed in Q3;
• Operating costs are lower YoY (-5.4%; -€23.5mn), standing at €408.4mn (1Q21: €102.7mn; 2Q21:
€101.4mn; 3Q21: €101.6mn; 4Q21: €102.6mn), which reflects on the one hand the focus on cost
efficiency achieved with processes simplification and optimisation, and on the other hand the
investment in the business and in digital transformation, with both contributing to an improvement
of the Bank’s efficiency ratios;
•
In 2021, net impairments and provisions amounted to €352.7mn (including €71.8mn impairment for
Covid-19 related risks), representing a YoY reduction of -€838.7mn (-70.4%).
NET INTEREST INCOME
Net interest margin is stable in 2021 when compared with 2020 (2020: 1.41%; 2021: 1.42%), with a
17bp reduction in the average liability rate, which offset the decrease in the average asset rate as a
result of the lower loans rates.
39
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES NET INTEREST INCOME (NII) AND NET INTEREST MARGIN (NIM)
Average Balance
Average Rate
Income / Costs
Average Balance
Average Rate
Income / Costs
31-Dec-21
31-Dec-20
mn€
INTEREST EARNING ASSETS
Customer Loans
Mortgage Loans
Consumer Loans and Others
Corporate Lending
Money Market Placements
Securities and Other Assets
INTEREST EARNING ASSETS AND OTHER
INTEREST BEARING LIABILITIES
Customer Deposits
Money Market Funding
Other Liabilities
OTHER NON-INTEREST BEARING LIABILITIES
INTEREST BEARING LIABILITIES AND OTHER
NIM / NII (without stage 3 impairment adjustment)
Stage 3 impairment
NIM / NII
24 995
9 905
1 380
13 710
4 602
10 241
39 838
38 148
26 580
10 497
1 070
1 690
39 838
2.01%
1.04%
5.86%
2.33%
0.07%
1.28%
1.60%
0.18%
0.19%
-0.51%
6.53%
-
0.17%
1.43%
1.42%
509
104
82
323
3
133
645
68
51
-54
71
-
68
577
-4
573
24 939
9 987
1 328
13 624
2 993
10 665
38 597
36 782
25 787
9 913
1 081
1 815
38 597
2.13%
1.20%
6.24%
2.42%
0.54%
1.26%
1.77%
0.35%
0.27%
-0.13%
6.70%
-
0.34%
1.43%
1.41%
541
122
84
335
16
137
694
132
72
- 13
74
-
132
562
- 6
555
The average rate on customer loans was 2.01%, lower YoY (-12bps) given the different business mix
(+1bps) and the lower interest rate environment (-13bps). The average customer loans balance slightly
increased YoY despite impact by the loan portfolio sales (Projects Wilkinson and Orion).
The average balance of deposits was €26.6bn, with an average interest rate of 0.19% (-8bps YoY),
and Money Market Funding was €10.5bn, with -0.51% average interest rate, benefiting from the
conditions of the ECB long-term refinancing operations.
The Group therefore was able to increase the spread between the rate on interest earning assets
(1.60%; 2020: 1.77%) and the cost of liabilities (0.17%; 2020: 0.34%) with a positive impact on overall
net interest margin (1.42%; 2020: 1.41%).
FEES AND COMMISSIONS
Fees and commissions amounted to €282.5mn in 2021, representing a 3.9% YoY increase (+€10.6mn).
This positive development is driven mainly by (i) a strong performance in Payments Management
(+5.3%; +€5.7mn YoY) due to higher volume of transactions and pricing, and (ii) volume increase in the
Asset Management & Bancassurance (+10.6%; +€6.5mn), reflecting more robust commercial activity
and increased customer appetite.
FEES AND COMMISSIONS
Payments Management
Commissions on Loans, Guarantees and Similar
Asset Management and Bancassurance
Advising, Servicing and Other
TOTAL
31-Dec-21
31-Dec-20
absolute
Change
114.2
85.5
68.0
14.8
282.5
108.5
86.3
61.5
15.6
271.9
5.7
-0.8
6.5
-0.8
10.6
mn€
%
5.3%
-1.0%
10.6%
-5.0%
3.9%
40
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES CAPITAL MARKETS AND OTHER OPERATING RESULTS
The results of financial operations were positive by €75.9mn mostly due to hedging of interest rate risk
which more than offset the negative impact of LME concluded in the 3rd quarter (-€73.5mn). The LME
consisted in the buy-back of expensive senior zero-coupon bonds (~7% yield) with long maturity and
will generate future savings of ~€475mn (until maturity).
Other operating results amounted +€40.4mn, including gains in investment properties (+€35.4mn),
the change in the pension fund actuarial calculation methodology (+€37.2mn), the costs related
with contributions to the Single Resolution Fund (-€25.3mn) and to the Portuguese Resolution Fund
(-€15.2mn).
NET IMPAIRMENTS AND PROVISIONS
31-Dec-21
31-Dec-20
absolute
Customer Loans
Securities
Other Assets and Contingencies
TOTAL
149.4
47.8
155.6
352.7
524.4
41.0
626.0
1 191.5
-375.1
6.8
- 470.4
-838.7
Variação
mn€
%
-71.5%
16.5%
-75.1%
-70.4%
OPERATING COSTS
3.3.2 Balance Sheet and Activity
Operating costs decreased 5.4% YoY, reflecting the continued optimisation and simplification of the
organisation and its processes.
CUSTOMER LOANS
OPERATING COSTS
31-Dec-21
31-Dec-20
absolute
Staff Costs
General and Administrative Costs
Depreciation
TOTAL
233.3
141.1
34.0
408.4
245.6
153.2
33.1
431.8
- 12.3
- 12.1
0.9
- 23.5
Change
mn€
%
-5.0%
-7.9%
2.8%
-5.4%
Staff costs totalled €233.3mn (-5.0% YoY), maintaining the downward trend of recent years, and
as a result of increased efficiency. As of 31 December 2021, novobanco Group had 4,193 employees
(Dec/20: 4,582; -389 YoY).
General administrative costs decreased 7.9% YoY, to €141.1mn, benefiting from the implementation of
efficiency measures related to reorganisation and rationalisation of processes.
The total number of branches as of 31 December 2021 was 311 (Dec/20: 359; -48 branches YoY).
NET IMPAIRMENTS AND PROVISIONS
In 2021, novobanco Group recorded net impairments and provisions amounting to €352.7mn (including
additional impairment for Covid-19 related risks and a provision for a contingency liability for aggravated
taxes introduced by the 2021 State budget), a reduction compared to 2020 (-70.4%; -€838.7mn).
The cost of risk reached 60bps (or 31bps without the impairment for Covid-19 related risk).
novobanco’s strategy is one of supporting the domestic business community combined with a robust
and disciplined lending policy. This support has been provided across all industry sectors and all
companies, with an emphasis on exporting SMEs and those that focus on innovation in their products,
services or production systems.
CUSTOMER LOANS
31-Dec-21
31-Dec-20
absolute
YTD Change
Loans to corporate customers
Loans to Individuals
Residential Mortgage
Other Loans
Customer Loans (gross)
Provisions
Customer Loans (net)
13 714
11 218
9 812
1 406
24 932
1 248
23 685
13 873
11 344
10 010
1 333
25 217
1 600
23 617
- 159
- 125
- 198
73
- 284
- 352
68
mn€
%
-1.1%
-1.1%
-2.0%
5.5%
-1.1%
-22.0%
0.3%
41
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES Loans to customers (gross) totalled €24,932mn with the YoY evolution (-1.1%) impacted by the
continuing reduction of NPL stock. During 2021, novobanco sold portfolios of non-performing loans
and related assets with a gross book value of €373.3mn.
The risk indicators of 2021, and comparison with previous year, are presented below:
FUNDING
Total customer funds amounted to €33.8bn at the end of 2021, showing an increase of 6.6% YTD,
being noteworthy the increase on deposits (+4.7% YTD), which represent 80.9% of total customer
funds.
TOTAL FUNDS
Deposits
Other Customer Funds (1)
Debt Securities (2)
Subordinated Debt
Sub -Total
Off-Balance Sheet Funds
Total Funds
31-Dec-21
31-Dec-20
absolute
YTD Change
27 315
267
1 054
415
29 052
4 711
33 762
26 093
229
558
415
27 296
4 376
31 672
1 222
38
496
0
1 756
335
2 091
mn€
%
4.7%
16.5%
88.9%
0.0%
6.4%
7.6%
6.6%
(1) Includes checks and pending payment instructions, Repos and other funds.
(2) Includes funds associated to consolidated securitisation operations.
ASSET QUALITY AND COVERAGE RATIOS
31-Dec-21
31-Dec-20
absolute
YTD Change
Overdue Loans > 90 days
Non-Performing Loans (NPL)1
Overdue Loans > 90 days / Customer Loans (gross)
Non-Performing Loans (NPL) 1 / Customer Loans (gross)
+ Deposits with Banks and advances to Banks (gross)
Credit Provisions / Customer Loans
Coverage of Overdue Loans > 90 days
Coverage of Non-Performing Loans 1
1. Includes Deposits and Loans and advances to Banks and Customer Loans
290
1 749
1.2%
5.7%
5.0%
430.2%
71.4%
610
2 498
2.4%
8.9%
6.3%
262.2%
74.1%
-320
-749
-1.3
-3.2
-1.3
168.1
-2.6
mn€
%
-52.5%
-30.0%
p.p.
p.p.
p.p.
p.p.
p.p.
The reduction in loans overdue by more than 90 days and non-performing loans (including deposits
with Banks and loans and advances to Banks), led to an improvement in the respective asset quality
ratios to 1.2% and 5.7%, respectively (Dec/20: 2.4% and 8.9%).
As at 31 December 2021, the provision coverage of NPL by impairments (including deposits with Banks
and loans and advances to Banks) was 71.4%.
SECURITIES
The securities portfolio, which is the main source of assets eligible for funding operations with the
European Central Bank (ECB), amounted to around €10.5bn on 31 December 2021, representing 23.5%
of assets.
net of impairment
SECURITIES PORTFOLIO
31-Dec-21
31-Dec-20
absolute
YTD Change
Portuguese sovereign debt
Other sovereign debt
Bonds
Other
Total
3 056
3 197
3 413
805
10 471
3 468
3 710
3 323
866
11 367
- 412
- 512
89
- 61
- 896
mn€
%
-11.9%
-13.8%
2.7%
-7.0%
-7.9%
42
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 3.4 BUSINESS SEGMENTS
3.4.1 Corporate
In 2021 novobanco maintained its long-standing close involvement with the Portuguese business
sector, providing financial support and helping companies to adjust their strategies to the new reality.
To serve its corporate clients, as at December 2021 novobanco had two hubs for Large Companies (in
Lisbon and Oporto) and 20 Business Centres throughout the country, with teams dedicated to the
medium-sized segment.
This strong presence in the Portuguese business community has resulted in Bank market shares of
14.5% in loans and 13.1% in deposits in Corporates and SMEs.
In 2021, novobanco continued to support its corporate customer base, through three key pillars:
• financial support to small and medium-sized companies, with loans to the medium-sized companies
posting a significant increase of 4.6%;
• management of requests for moratoria and adjustment of repayment schedules to the clients’
financial capacity;
On the digital transformation front, the highlight was the launch of the new version of novobanco online
for companies. The service has been rethought from the standpoint of user experience, featuring new
menus, a new homepage with improved functionality and widgets for quick action and information,
easier access to documentation made available by the Bank to the Client, and new help solutions. The
new concept was developed incorporating feedback from clients and the commercial and technical
teams, the key purpose being to solve the main difficulties experienced on a daily basis, thus allowing
a substantial increase in users’ levels of satisfaction and involvement, raising the penetration rate
to around 78%. Within novobanco online Empresas, it is worth to highlight the financial aggregator,
a digital financial management solution, supported by a strong analytical and predictive component,
which aims to improve the operational efficiency of companies.
With regard to the assessment made by the corporate clients, the NPS (Net Promoter Score) rose to
32.7, an increase of 4.5 pp compared to the previous year. The main reason for promoters to recommend
novobanco is related to the Quality of Service. Hence, the weight of Very Satisfied Customers with the
Customer Service reached 89.9%, which represents a YoY increase of 1.2%.
• continued focus on the digital transformation, developing remote relationship and signature tools
to address the social distancing requirements, and launching a new version of the internet banking
service with relevant improvements in terms of functionality and user experience.
3.4.2 Retail
A major feature of 2021 was the launch of the new investment support programmes, including the RRP
and Portugal 2030, which aim to support the development of the economy by fostering innovation,
digital transformation, and clean / renewable energy transition. In this context, a multidisciplinary team
was created being focused on the following main areas: i) provision of permanently updated information
on the existing programmes, facilitating clients’ access to the available support; ii) partnership with
consultants specialising in the preparation of applications to investment programmes; iii) information
and clarification addressed to clients, associations and other relevant entities; iv) launch of a specific
offer of financial products to cover investment needs under these programmes (e.g.: advances on
funds, financing of equity and working capital and issuance of guarantees).
In Trade Finance, novobanco provides a wide range of products and specialised advice in support of
international trade. The Bank’s know-how in this segment is recognised by its clients, resulting in a
market share of around 20.2% (+0.9pp YoY), as well as the market, as seen by the award for best Trade
Finance Bank in Portugal by the Global Finance international magazine.
novobanco’s positioning relies on building long-term relationships with its clients, as reflected in the
continuous optimisation of the commercial network in order to meet clients’ expectations and needs.
Considering the ongoing behavioural changes in all age brackets, largely induced by consumption
habits created by other industries, it has become essential to be seamlessly available to the clients
through their preferred channels, and to be aware of the journey made by each client to adopt the
Bank’s solutions - a concept known as Omnicanality.
The omnichannel approach maintains the key support of the branch network. novobanco continues to
revamp the branch network, redesigning the face-to-face service experience, with greater focus on
customised service and space for relaxed and meaningful engagement with the clients. This experience
has required a total redesign of the branches’ layout and architecture, creating a transparent ecosystem
– main branches have areas for social use in line with trends. There are currently more than 100 branches
with the new format (69 of which were redesigned in 2021), and the process for rest is underway.
43
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES Within the scope of omnicanality, and besides the physical branch network, novobanco has 65
Virtual Teller Machines (VTMs) featuring advanced physical currency management solutions (for
cash withdrawal and deposit), which are a key basis for the development of new virtual value-added
services, such as product simulation or access to specialists.
In terms of customer loans, the main highlight was the origination of €905mn in mortgage loans,
with growth more pronounced in the last four months of the year. This growth was underpinned by
novobanco’s partnerships strategy, with credit intermediaries increasing by 30% and standing as the
Bank’s largest loan origination channel.
The universe of clients subscribing to the 360º Link service also continues to expand. 360º Link is a
remote manager service with monitoring capabilities for high-value clients who prefer remote contact.
The digital channel is central to the customer experience, and novobanco invests much in its digital
tools, particularly in journey management tools (physical and digital), following the widespread trend of
online search and telephone or in-branch execution. The following main implementations/innovations
stand out in 2021:
• Account opening remote solutions, using the Digital Mobile Key or by Video Call, offering a complete,
fast, smart, more efficient, and entirely digital onboarding experience. This has permitted a reduction
of 50% to 100% in front-office time and of more than 100kg in paper sheets consumption;
• The new app for individual clients with a fully renewed design and customer experience, adaptable
and customisable, inclusive and predictive (data-science-based), and offering a wide range of
services and solutions (e.g., aggregation of accounts with other banks, underwriting of investment
funds, life insurance, and validation of transactions by push notifications) to improve user experience
and security;
Consumer Lending (gross stock; consumer lending & other) increased by 5.3% vs 2020. Production
through the Digital Channels (4-fold YoY increase) deserves a note, as well as production in the Non-
Financial Offer, with continued launches of new products and joint promotion with partners of various
events for employees and clients, which yielded an 18% increase vs. 2020.
With regard to the investment offer, novobanco, based on a proprietary model, selects and sells the
Mutual Funds of independent management companies that best reflect and capture market trends.
In 2021, thematic funds were included in the offer, which, together with the structured funds, permit
to invest in these market trends, and in particular in Technology, Health and Climate Action. The digital
solution available improved the customer experience when subscribing Investment Funds, leading to
an increase of 231% in digital sales vs 2020.
To support Clients in their investment decisions, novobanco offers an Investment Advisory Service.
According to the client’s investor profile and initial portfolio, the advisory service submits the most
suitable investment proposals based, among others, on a strategic analysis of different asset classes
and sectors, the macroeconomic environment and the definition of the asset allocation.
• Homebuying: Reinvention of the home buying experience, from simulation to title deed, providing a
comprehensive omnichannel experience. In 2021, 50% of title deeds were mobile sourced, and 50%
of online-sourced title deeds correspond to new clients. This allowed for a 40% reduction in the
average time per deed and the elimination of paper documents equivalent to 8,000 sheets;
The Small Businesses segment (loan portfolio) grew by 7.8% YoY in 2021, based on its ability to closely
monitor its clients and recurrently assess the pandemic impact on individuals, as well as whether the
clients are prepared for the end of the loan moratoria. Customer funds in this segment grew by 15.2%,
denoting a propensity to save in a period of uncertainty.
• Phygital: implementation of mobility and information sharing solutions (in person and remote),
cementing the Bank’s relationship of transparency and proximity with the clients and its omnichannel
strategy, speeding up and simplifying processes through different types of digital signatures, and
fostering a paperless culture based on more secure and efficient practices. More than 85% of the
eligible transactions are carried out through the new solutions, which permits to save more than 13
tonnes of paper.
Reflecting the strategy implemented by novobanco, in 2021 customer acquisition in the Retail segment
increased by 7% YoY, with approximately 30% of the new clients being under 25 years (which compares
with a 10% stock of clients in this age group) - a relevant trend of rejuvenation of the Bank’s customer
base. In this context, the Cross-Segment Programme, which gives employees of companies with which
the Bank has relationships access to more favourable conditions in several of the Bank’s products and
services, accounted for 22% of all individual clients onboarded in 2021.
In both the Corporate and the Retail segments, the purpose of digital transformation involves i)
accelerating front-to-back digitisation, improving experience and efficiency by addressing the customer
journeys and transforming the operating model, and ii) transforming the digital channels to ensure a
fully omnichannel experience and greater customisation, leveraging best-in-class data science.
This strategy drove an increase in the number of active digital clients, to 54.4% of the total in December
2021 (the number of digital clients increased by 7% YoY) as well as a 12% annual rise in the number of
active mobile clients (40% of clients are mobile). In turn, this underpinned an annual increase of > 165%
in the number of product units sold through the digital channels (excluding deposits, which are already
traditionally high).
44
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES In 2021, 72% of novobanco contacts with individual clients were made through the digital channels
(+3 pp vs. 2020). Reflecting a reinforced focus on a “mobile digital first” strategy, mobile continues to
be the main means of contact of individual clients, with interactions (as measured by the number of
logins) growing by 20% vs. 2020.
CUSTOMER LOANS EVOLUTION
(€mn)
-1.7%
356.5
350.4
ACTIVE DIGITAL CLIENTS PENETRATION RATE
39.5% 41.9% 44.8% 46.6% 48.0% 49.0% 50.3% 52.6% 53.5% 54.4%
26.8% 29.4% 32.2% 33.4% 35.6% 37.7% 39.3% 40.3%
19.3%
22.6%
5%
55%
4%
51%
NET PROFIT EVOLUTION
(€mn)
32%
33%
Dec.17
Jun.18
Dec.18
Jun.19
Dec.19
Jun.20
Dec.20
Jun.21
Sep.21 Dec.21
Total
Mobile
7%
2015
13%
Branch
4%
2020
46%
27%
23%
2017
ATM
2.8
3%
41%
22%
+71%
34%
2%
2021
39%
15%
44%
4.8
2019
Online
1%
29%
15%
55%
1%
27%
12%
60%
2021
Mobile
39.5% 41.9% 44.8% 46.6% 48.0% 49.0% 50.3% 52.6% 53.5% 54.4%
26.8% 29.4% 32.2% 33.4% 35.6% 37.7% 39.3% 40.3%
19.3%
22.6%
CUSTOMER TOUCHPOINTS
5%
55%
33%
7%
4%
51%
32%
13%
Dec.17
Jun.18
Dec.18
Jun.19
Dec.19
Jun.20
Dec.20
Jun.21
Sep.21 Dec.21
2015
4%
46%
27%
23%
2017
3%
41%
22%
34%
1%
29%
15%
55%
2%
39%
15%
44%
2019
1%
27%
12%
60%
2021
2020
2021
CUSTOMER DEPOSITS EVOLUTION
(€mn)
392.7
+8.8%
427.2
Total
Mobile
Branch
ATM
Online
Mobile
2020
2021
novobanco dos Açores
The strategy of novobanco dos Açores is particularly focused on supporting the Azorean regional
business fabric, namely SMEs and companies that incorporate innovation in their products, services or
production systems. In 2021, novobanco dos Açores continued its wide-ranging outreach activity to its
Clients, supporting the pressing and growing needs of the Azorean society, to which contributed the
opening of the first of its branches designed in accordance with the new distribution model implemented
at novobanco Group level. As a result of the activity developed and the proximity maintained with the
market, novobanco dos Açores managed to gain more than 1,200 new clients in 2021.
novobanco dos Açores, posted a net profit of €4.8mn, a YoY increase of 71.4%. This increase, which
occurred despite the reduction in net interest income, is mainly due to the lower level of impairments
and provisions, mainly for non-financial assets (real estate), and to the reduction in operating costs.
In 2021 novobanco dos Açores’s assets increased by €42.1mn (+7.2%), to €627mn, notwithstanding
the annual reduction in net customer loans (-1.7%; -€6.1mn), to €350.4mn. In December 2021,
customer loans totalled €7.3mn, which corresponds to an overdue loans ratio of 2.0% only.
As to customer funds, in December 2021 the total amount of customer deposits was €427.2mn, which
represents an increase of 8.8% compared to December 2020.
45
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES Banco Best - Banco Electrónico de Serviço Total, S.A.
In 2021, Banco Best reached an all-time high in terms of assets under management, which, at €2.7bn,
rose by €529mn compared with 2020 (+24%). The main drivers of this result were growth in the Asset
Management segment (+ €421mn; +33%) and in Trading (+ €62mn; +25%). Customer loans increased
by 20% in the year.
New clients acquisition performed very well, with a 41% increase. The clients favoured the digital
media, with 40% of accounts opened by videoconference or digital mobile key.
2021 HIGHLIGHTS
Banco Best closed 2021 with a net profit of €3.3mn, which represents a YoY increase of 83%. This
performance benefited from the increase in fee and commission income (€3.2mn; +22%), underpinned
by the excellent performance of the main Asset Management and Trading commercial indicators, as
well as by operating costs control (-3.3% vs 2020).
Digital Channels
Offer & Innovation
Processes & Structural
The channels (App and Website) had a crucial boost from the
modernisation of the image, the integration of new products,
services and functionalities, and the transformation of processes,
with significant impacts on UX/UI,
including the following:
All investment solutions and products (e.g., ETFs, Equities) as
well as other tools and functionalities (e.g., dashboard, Smart
search) made available on the App;
Account opening on the App, Website and internal channels;
process redesign, passport identification and automatic PEP
validation;
Website redesign – including the clients’ transactional
website
Consolidation of leadership in the management of a digital open
platform of investment and trading, with the introduction of new
partnerships and solutions:
The investment in activity support generated additional value
for the client, and improved the efficiency of processes and the
management of operational risk:
Alternative investment offer - Investment in Collaborative
App - Certification of equipment for security alerts, device
Finance through a partnership with RAIZE;
management and cards – Best Guardian;
New insurance partnership, providing access to an extensive
offer of Protection Insurance through the MDS platform;
Strengthening of the active-active systems infrastructure
through the introduction of a smart arbitration mechanism;
New investment partners: Sixty Degrees, Natixis, Bluebay
Digital transformation of the Account opening process;
and Nomura;
PSD2 - review of flows and API on the website and App.
Rankia 2021 Awards: Best Funds Platform for the second
consecutive year and Best ETF Broker.
46
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES GNB Gestão de Ativos
GNB Gestão de Ativos maintained its management focus on the offer of products and services that
create financial value for its clients. The quality of management and consistency of performance were
recognised with 10 awards during the year, both domestic and international, including Morningstar
Fund Awards Portugal 2021, Refinitiv Lipper Awards and the Best Funds Awards - Jornal de Negócios/
APFIPP with the NB Obrigações Europa, NB Euro Bond, NB PPR and FP PPR Vintage funds earning
awards for their performance in 2020. GNB Gestão de Ativos also earned the award for Best Bond Fund
Manager (Portugal) 2021 from CFI.co – Capital Finance International.
In 2021 income from asset management activities increased by 26%, to €10.3mn, driven by positive
impacts from both the side of revenues - with net fees and commissions growing by more than 4%
-, and from the side of costs, which fell by around 8%. In 2021 the cost-to-income was 46%, a sharp
reduction from 54% in 2020.
Highlights in 2021:
ASSETS UNDER MANAGEMENT
(December 2021)
13%
12%
€9.9bn
48%
27%
8.2
+26%
10.3
Gestão de Patrimónios
Fundos de Pensões
Real Estate
Fundos Mobiliários
2020
2021
• Assets under management of all mutual funds domiciled in Portugal and Luxembourg increase
by 16%, to €1.3 billion. With the aim of increasing the focus on the most suitable products for its
clients, while maintaining considerable diversification of products and services, in 2021 the offering
was restructured and two funds on the Luxembourg platform were liquidated.
NET PROFIT EVOLUTION
(€mn)
• GNB Real Estate’s management remained faithful to its mission of creating financial value, pursuing
its main objective of reducing exposure to non-strategic real estate and reorganising the portfolio of
real estate funds under its management. At 31 December 2021 the volume under management of
real estate investment funds totalled approximately €1 083mn (+1.54% vs 2020). GNB Real Estate
closed 2021 with a market share of 9.9% (vs 9.8% in 2020).
€9.9bn
48%
12%
13%
8.2
+26%
10.3
•
In the Pension Funds segment, assets under management grew by 7%, to €2.63bn, with four more
corporate pension plans, two of which closed-end, contributing to this growth.
27%
Gestão de Patrimónios
Fundos de Pensões
Real Estate
Fundos Mobiliários
2020
2021
47
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 3.5 NOVO BANCO SEPARATE
Results
novobanco reported a net profit of €225.9mn in 2021, which compares with a net loss of €1 374.2mn
in 2020.
Operating costs totalled €380.8mn, a YoY reduction of 5.4% that reflects the improvements achieved
in recent years in terms of simplifying processes and optimising costs and structures.
Commercial banking income reached €832.0mn (+2.4% YoY), driven by the increase in net interest
income (+2.3%) and in fees and commissions (+2.8%).
Net operating income was positive, at €505.7mn. Impairments and provisions registered a notable
reduction of 77.4% relative to the previous year, to €270.4mn.
Capital market results were positive, at €78.0 million, which compares with -€224.2mn in 2020
(negative impact of €300.2mn in Dec-20 from the independent valuation of novobanco’s restructuring
funds).
INCOME STATEMENT
Net Interest Income
Fees and Commissions
Commercial Banking Income
Capital Markets Results
Other Operating Results
Banking Income
Operating Costs
Net Operating Income
Restructuring funds-independent valuation
Net Impairments and Provisions
Credit
Securities
Other Assets and Contingencies
Income before Taxes
Taxes
Special Tax on Banks
Net Income for the year
31/Dec/21
31/Dec/20
% Change
mn€
581.1
251.0
832.0
78.0
-23.6
886.4
380.8
505.7
0.0
270.4
147.1
47.3
76.0
235.3
-24.0
33.4
225.9
568.0
244.2
812.2
-224.2
-35.9
552.1
402.7
149.4
-300.2
1 195.5
520.5
40.9
634.1
-1 346.3
-4.2
32.2
-1 374.2
2.3%
2.8%
2.4%
...
34.3%
60.6%
-5.4%
...
100.0%
-77.4%
-71.7%
15.8%
-88.0%
...
...
3.8%
...
48
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES Activity
novobanco’s activity in 2021 was developed under the same guidelines already referred for novobanco
Group.
ACTIVITY EVOLUTION
Assets
Customer Loans (gross)
Loans to Individuals
Residential Mortgage
Other Loans
Loans to corporate customers
On Balance Sheet Funds
Deposits
Other Customer Funds (1)
Debt Securities
Subordinated Debt
(1) Includes checks and pending payment instructions, Repos and other funds.
31/Dec/21
31/Dec/20
absolute
Change
44 341
23 165
9 599
8 334
1 265
13 566
28 432
26 739
259
1 019
415
44 042
23 332
9 609
8 395
1 214
13 723
26 709
25 557
222
515
415
299
- 167
- 10
- 61
51
- 157
1 723
1 182
37
504
0
mn€
%
0.7%
-0.7%
-0.1%
-0.7%
4.2%
-1.1%
6.5%
4.6%
16.7%
97.8%
0.0%
At 31 December 2021, deposits totalled €26.7bn, an increase of €1.2mn compared to December 2020
(€25.6bn).
Gross customer loans totalled €23,165 million (-0.7% vs. Dec-2020), such decrease being influenced
by the strategy of reducing non-performing loans (NPL). In 2021, sales of non-performing loan portfolios
and related assets amounted to €367.1mn (gross).
The quality of the loan portfolio at the end of the period shows a cross-cutting improvement in
novobanco’s asset quality. The overdue loans > 90 days / gross loans ratio improved to 1.2% (from
2.6% in Dec-20), with the NPL coverage ratio rising to 72.3% (64.9% in Dec-20).
ASSET QUALITY
DATA BASIS (Euro millions)
Customer Loans (gross)
Overdue Loans
Overdue Loans > 90 days
Forborne Loans
Non-Performing Loans (NPL)*
Customer Loans Impairment
ASSET QUALITY AND COVERAGE RATIOS (%)
Overdue Loans / Gross Loans to Customers
Overdue Loans > 90 days / Gross Loans to Customers
Forborne Loans / Gross Loans to Customers
Non-Performing Loans (NPL)* / Gross Loans to Customers + Gross Loans to Credit Institutions
Impairment / Total Loans to Customers
Impairment / Overdue Loans
Impairment / Overdue Loans > 90 days
Impairment / Non-Performing Loans*
* includes Credit Institutions
31/Dec/21
31/Dec/20
absolute
Change
23 165
301
283
1 537
1 708
1 236
1.3%
1.2%
6.6%
5.9%
5.3%
409.9%
437.3%
72.3%
23 332
616
603
2 054
2 445
1 587
2.6%
2.6%
8.8%
9.3%
6.8%
257.5%
263.3%
64.9%
- 167
- 315
- 320
- 516
- 736
- 351
-1.3
-1.4
-2.2
-3.4
-1.5
152.4
174.1
7.4
mn€
%
-0.7%
-51.1%
-53.1%
-25.1%
-30.1%
-22.1%
p.p.
p.p.
p.p.
p.p.
p.p.
p.p.
p.p.
p.p.
49
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 3.6 RELEVANT FACTS FROM
THE ACTIVITY AND SUBSEQUENT
EVENTS
Relevant Facts of 2021 are mentioned in point 1.1.3 Main Events of the Management Report.
SUBSEQUENT EVENTS
Following the sale agreement between the Resolution Fund and the shareholder Lone Star, on February
24, 2022, the Resolution Fund transferred the ownership of shares to Nani Holdings as a result of
the capital increase through conversion of conversion rights. The participation of Nani Holdings in
novobanco remains at 75%, with the participation of the Resolution Fund being diluted to 23.44%.
3.7 MAIN RISKS
AND UNCERTAINTIES
2022 will continue to be marked by consequences of the Covid-19 pandemic which, despite the
progress being made in terms of vaccination, which should start yielding results as the year advances,
continues to exert acute pressure on the economy due to the imposition of successive restrictions,
with potential impacts in terms of Credit and Liquidity Risk.
The main risks and uncertainties for novobanco are the following:
1. Credit Risk relating to the adverse consequences of the Covid 19 pandemic
The impact of Covid-19 on global markets has been wide-ranging, with increasing short-term volatility
and a contraction in activity in the main economies worldwide. The pandemic has led various countries,
including Portugal, to declare a state of emergency and to adopt different restrictive measures (including
constitutional exception measures), such as the imposition of travel restrictions, the establishment
of quarantines and the temporary shutdown of various institutions and businesses. Although the full
implications of the Covid-19 outbreak cannot be entirely determined yet, the pandemic has had a
material adverse impact on the Portuguese economy and on the Portuguese market. The risk of a new
wave it’s not completely out of expectations until pandemic comes to an end.
2. The bank still have a significant credit risk
novobanco is exposed to credit risk, meaning, by definition, the risk that the Group’s borrowers and other
counterparties are unable to fulfil their payment obligations and that the collateral securing payments
of these obligations is insufficient. Adverse changes in the credit quality of the Group’s borrowers
and counterparties, a general deterioration in Portuguese or global economic conditions or increased
systemic risks in financial systems could affect the recovery and value of the Group’s assets and require
an increase in provisions for bad and doubtful debts and other credit losses. As of 31 December 2021 the
ratio of overdue loans greater than 90 days to gross loans was 1.1% with a coverage ratio of 438.8%
and the ratio of non-performing loans was 5.2%, compared to 8.9%. as at 31 December 2020, with a
coverage ratio of 72.0% (74.1% as at 31 December 2020).
3. Exposure to Real Estate
The Group is exposed to fluctuations in the value of Portuguese real estate, both directly through
assets related to its operations or obtained in lieu of payment, or indirectly, through real estate that
secures loans or by financing real estate projects. As of December 2021, the Group’s real estate
exposure totalled €0.8 billion, which represented 1.8% of total assets (vs 2.0% in December 2020).
Assets registered as investment properties amounted to €0.6 billion at 31 December 2021 (vs €0.6
billion in 31 December 2020), and the real estate assets registered as other assets amounted to €0.2
billion as at 31 December 2021 (including €170 million net repossessed real estate).
4. Changes in interest rates may adversely affect the bank’s net interest margin and results of
operations
novobanco is subject to interest rate risk. As is the case with other banks in Portugal, the Group is
particularly exposed to differentials between the interest rates payable by it on deposits and the
interest rates that it is able to charge on loans to customers and other banks. This exposure is increased
by the fact that, in the Portuguese market, loans typically have floating interest rates, whereas the
interest rates applicable to deposits are usually fixed for periods that may vary between three months
and three years. As a result, Portuguese banks, including novobanco, frequently experience difficulties
in adjusting the interest rates that they pay for deposits in line with market interest rate changes. This
trend is reinforced by the current historically low interest rates that put pressure on the bank’s interest
margin, which is crucial for its profitability.
5. Concentration risk in credit exposures
The bank is subject to a concentration of credit risk in particular industries, countries, counterparties,
borrowers, issuers and customers. novobanco’s loans and advances to customers, which comprised a
net amount of 53% of the Group’s assets as at 30 December 2021 (53% as at 31 December 2020), had
significant exposure with respect to the services sector and real estate activities, which represented
50
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 12.2% and 6.7%, respectively, of its loans and advances to customers as at 31 December 2021 (11.9%
and 7.0%, respectively, as at 31 December 2020). Macroeconomic downturn or deterioration in real
estate values, adverse business conditions, market disruptions or greater volatility in those industries
as a result of lower prices in such industries or other factors could result in significant credit losses for
the Group. Additionally, the Group is exposed to risks arising from the high concentration of individual
exposures in its loan portfolio, with the 10 largest loan exposures of the Group as at 31 December 2020
representing 10.1% of the total loan portfolio (gross) (10.2% as at 31 December 2020).
With the geopolitical uncertainty and the slowdown of the world’s main economies, the financial
markets sustained large and widespread losses, foreshadowing a severe deterioration of the global
macroeconomic scenario.
This environment generates risks for all Financial Institutions, namely: i) stock of non-performing assets
and their potential growth; ii) cybercrime and disruption in Information Technology (IT); iii) low interest
rates; and iv) growing competition from non-banking entities.
6. The bank’s business is subject to operational and cybercrime risks
The bank is subject to certain operational risks, including interruption of service, errors, fraud by third
parties (including large-scale organised fraud, as a result of the Group’s financial operations), fraud
by the bank’s own employees, breach or delays in the provision of services, breach of confidentiality
obligations with regards to customer information and compliance with risk management requirements.
Despite the mechanisms in place today, novobanco may be unable to successfully monitor or prevent
all or part of these risks in the future. Any failure to successfully execute the bank’s operational risk
management and control policies could result in reputational damage and/or have a material adverse
effect on the Group’s financial condition and results of operations.
7. The bank’s activity is subject to reputational risks
The bank is exposed to reputational risks understood as the probability of negative impacts resulting
from an unfavourable perception of its public image, whether proven or not, among customers,
suppliers, shareholders, analysts, employees, investors, media and any other bodies with which the
bank may be related, or even public opinion in general.
novobanco is subject to continuous political and public scrutiny (including, but not limited to) in relation
to its incorporation and the Lone Star sale, in particular the existence of the CCA and its funcioning,
which have led to a number of political initiatives such audits from the Court of Auditors (Tribunal
de Contas) at the request of the Portuguese Parliament, and the creation of a Parliament Inquiry
(Comissão Eventual de Inquérito Parlamentar às perdas registadas pelo novobanco e imputadas ao
Fundo de Resolução). In addition, as a result of the rules introduced by Law No. 15/2019 of 12 February,
on transparency of information concerning granting of credits of significant value, some independent
audits have and may continue to be performed in the future.
8. Military operation on the territory of Ukraine
On 24 February 2022, the Russian Federation began a military operation on Ukrainian territory,
triggering a war that currently involves three countries (Russia, Ukraine and Belarus). In response, a
group of countries, including the NATO and European Union countries, and others, approved several
sanctions with the aim of impacting Russia’s economy, and also the economy of Belarus. There is the
possibility that novobanco will be impacted by losses on assets exposed to those countries as a result
of the said sanctions, as well as the destruction caused by the war in Ukraine. novobanco’s exposure -
Customer loans and securities - to the Russian Federation, Belarus and Ukraine as at 31 December 2021
totalled 49.3 million euros. Note 47 - Subsequent Events in novobanco Group’s Consolidated Financial
Statements and Notes includes additional detail, including the breakdown by asset type and country.
51
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 4.0
CAPITAL,
LIQUIDITY & RISK
4.1 Capital Ratios
4.2 Liquidity and Funding
4.3 Risk Management
Vânia Elias
South Retail Department - 360 Senior Client Manager
Nelson Soças
South Retail Department - Branch manager
52
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 4.1 CAPITAL RATIOS
As of 31 December 2021, the CET1 ratio was 11.1% and total capital ratio was 13.1% (preliminary values).
In this context, it is important to highlight the fact that the European Central Bank (ECB) disclosed
during March 2020 several measures that allow Banks to operate temporarily below the required
capital level. These measures aim to prevent Banks from suspending financing to the economy in an
adverse economic environment. In addition, changes were introduced to the regulatory framework,
in force since June 2020, regarding the calculation of capital ratios, aimed at mitigating the impacts
of the Covid-19 pandemic. In these circumstances, novobanco adhered to the dynamic option of the
transitional regime of IFRS 9.
novobanco’s Common Equity Tier 1 (CET1) ratio is protected up to a predetermined threshold for the
amounts of losses verified in a perimeter of assets as outlined by the Contingent Capital Agreement.
The amount of compensation to be requested with reference to 2021 is €209.2mn (with this amount
not included in the calculation of regulatory capital with reference to 31 December 2021), took into
account the losses incurred in the assets covered by the Contingent Capital Agreement, as well as
the minimum capital condition applicable at the end of the same year under the Contingent Capital
Agreement.
Regarding the amount requested from the Resolution Fund for the year 2020, there are two divergences
between novobanco and the Resolution Fund, i.e. (i) the provision for discontinued operations in
Spain and (ii) valuation of participation units, which are subject to an arbitration decision. novobanco
considers these amounts (in aggregate equal to €165mn) as due from the Resolution Fund under the
Contingent Capital Agreement, and has triggered the legal and contractual mechanisms at its disposal.
Additionally, novobanco and the Resolution Fund have a divergence, subject to arbitration, concerning
the application by novobanco, at the end of 2020, of the dynamic option of the transitional regime of
IFRS 9.
11.1%
CAPITAL RATIOS (CRD IV/CRR)
Risk Weighted Assets
Own Funds
Common Equity Tier 1
Tier 1
Total Own Funds
Common Equity Tier 1 Ratio
Tier 1 Ratio
Solvency Ratio
Leverage Ratio
(1) Updated values
(2) Preliminar
CET 1
(phased-in1; Preliminary; %)
TOTAL CAPITAL
(phased-in1; Preliminary; %)
2.4pp
4.9pp
P
E
R
S
f
e
i
l
e
R
8.7%
2.5%
1.7%
CCyB
CCB
P2R
4.5%
P1
Required
CET 1
31-Dec-20 (1)
(Phased-in)
31-Dec-20 (1)
(Fully loaded)
31-Dec-21 (2)
(Phased-in)
31-Dec-21 (2)
(Fully loaded)
26 689
26 392
24 929
24 689
mn€
(B)
(C)
(D)
2 902
2 903
3 415
10.9%
10.9%
12.8%
6.2%
2 511
2 512
3 023
9.5%
9.5%
11.5%
5.4%
2 768
2 769
3 276
11.1%
11.1%
13.1%
6.0%
2 507
2 509
3 016
10.1%
10.1%
12.2%
5.4%
P
E
R
S
f
e
i
l
e
R
8.7%
2.5%
1.7%
CCyB
CCB
P2R
4.5%
P1
Required
CET 1
13.5%
2.5%
3.0%
CCyB
CCB
P2R
8.0%
P1
P
E
R
S
f
e
i
l
e
R
11.1%
2.4pp
4.9pp
Dec-21
CET 1
13.1%
2.0%
2.1pp
11.1%
13.5%
2.5%
3.0%
CCyB
CCB
P2R
8.0%
P1
P
E
R
S
f
e
i
l
e
R
13.1%
2.0%
2.1pp
11.1%
Required
Total Capital
Dec-21
Total Capital
Dec-21
CET 1
Required
Total Capital
Dec-21
Total Capital
(1) On 12-Mar-20 the European Central Bank disclosed several measures that allow Banks to
operate temporarily below the required capital level; P2G not included.
53
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 4.2 LIQUIDITY AND FUNDING
HIGHLIGHTS
• Liquidity remains at comfortable levels and well above regulatory requirements.
• Stable funding structure, relying mainly in customer deposits.
• Cost optimization continues to be one of the main focus of the bank, without incurring undesirable
liquidity risks.
• 2021 marked the return to the capital markets, driven by the bank’s MREL requirements. Issuances
in the coming years are expected to ensure compliance with the MREL ratios and improve the bank’s
funding profile.
LIQUIDITY MANAGEMENT
novobanco manages liquidity in accordance with all the regulatory rules and its own management
principles, guaranteeing that all responsibilities are met, whether in normal market conditions or under
stress conditions. These include, among others, the ECB´s legal reserves, liquidity ratios (LCR and NSFR),
maintenance of adequate levels of liquid assets, definition of funding transfer pricing (FTP) framework
and establishment of an offer of financial products that results in a diversified panel of funding sources.
Short-term liquidity is monitored through daily mismatch reports, prepared in accordance with pre-
established guidelines and internally defined metrics, which allows the bank to make an early detection
of any signals of crisis with potential impacts on the bank, namely through idiosyncratic risk, contagion
risk (due to market tensions) or the risk of repercussions of an economic crisis on the bank. The report
monitors the evolution of the liquidity position, including eligible assets and liquidity buffers, main cash
inflows and outflows, deposits’ evolution, medium- and long-term funding, central banks funding, the
evolution of the treasury gap (net interbank deposits), as well as several warning indicators established
for the purpose.
This process ensures an ongoing and active role in liquidity risk management and risk assessment from
the EBD and also allows the bank to take immediate action whenever necessary.
In addition, the liquidity position is also daily reported to the Joint Supervisory Team.
In terms of the structural liquidity, novobanco manages its activity and funding sources in order to
achieve funding stability and cost optimization, avoiding as much as possible undesirable liquidity risks.
The structural liquidity of the bank is analysed in detail on the Capital and Asset Liability Committee
(CALCO), which meets on a monthly basis. Among other, CALCO analyses and discusses the bank’s
liquidity position, performs a comprehensive analysis of the liquidity risk and its evolution, with special
focus on current liquidity buffers and generation / maintenance of eligible assets for rediscount with
the ECB and respective impacts on the liquidity ratios.
novobanco Group’s funding policy is one of the major components of the bank’s liquidity risk
management, which stresses the diversification of funding sources by instruments, investors and
maturities. Given the commercial nature of the balance sheet, novobanco’s strategy has, since its
incorporation, largely relied on boosting customer deposits as its major source of funding, as deposits
were severely hit by the resolution and market access has not been normalized.
Additionally, the bank prepares a monthly liquidity report (for more details see ‘4.3. Risk Management),
considering not only the effective maturity but also behavioural maturity of the various products, which
allows to determine the structural mismatches for each time bucket. Based on this information and
the bank’s medium-term plan, the annual activity funding plan is prepared considering the established
budget targets. This plan, which is regularly reviewed, favours, as much as possible, stable funding
instruments.
The bank also has in place a contingency liquidity plan, which comprises a set of measures that, if
triggered, would allow the bank to manage and/or minimize the effects of a severe liquidity crisis.
These measures aim to address additional liquidity needs and boost the resilience of novobanco in a
potential stress situation.
Finally, the bank also performs, on an annual basis, an Internal Liquidity Adequacy Assessment Process
or ILAAP, which evaluates the liquidity position of the bank in a normal and stress scenario. The results
of this process, which is approved by the EBD, must be sent to the regulatory authorities and concluded
that the bank’s funding and liquidity structure and Internal processes are solid and that the bank could
withstand a stress scenario.
FUNDING STRUCTURE AND LIQUIDITY IN 2021
novobanco maintained a comfortable liquidity position throughout 2021, with deposits at the ECB
as at 30 December 2021 having increased to €5.3bn (vs. €2.4bn in Dec.2020). During the year,
liquidity management continued to involve the rationalization of funding sources and improvement of
profitability.
At the end of 2021 novobanco’s customer deposits totalled €27.3bn (€26.1bn in 2020), having
increased €1.2bn YoY, with a strong contribution from both the retail and corporate segments, despite
a continuous cost reduction. The positive performance in customer deposits was particularly relevant
in the retail segment, which increased €1.0bn YoY.
54
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES CUSTOMER DEPOSITS
(€bn)
FUNDING STRUCTURE
(€bn)
26.1
27.3
2020
2021
44.4
44.6
Deposits 59%
26.1
27.3
Deposits 61%
ECB and Interbank
Funding 23%
Debt Securities 2%
Other Liabilities 9%
Equity 7%
10.1
1.0
4.1
3.1
2020
ECB and Interbank
Funding 24%
Debt Securities 3%
Other Liabilities 4%
Equity 7%
10.7
1.5
2.0
3.1
2021
At the end of 2021, customer deposits remained the bank’s main funding source, accounting for 61% of
its funding structure (59% at the end of 2020), of which 72% were deposits from the retail segment.
In terms of loan portfolio, the bank’s core business was stable, as at 31 December 2021 total net loans
amounted to €23.7bn (vs. €23.6bn FY20). Despite the NPL’s sales, novobanco managed to maintain
a strong loan origination, with the corporate segment remaining at the core of its business model.
NET LOAN BOOK EVOLUTION
(€bn)
SECURITIES PORTFOLIO
(€bn)
23.6
23.7
2020
2021
Other
11.4
0.9
Bonds
3.3
Other
Sovereign Debt
Portuguese
Sovereign Debt
3.7
3.5
2020
10.5
0.8
3.4
3.2
3.1
2021
55
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES On the other hand, the securities portfolio reduced by around €0.9bn vis-à-vis 2020, largely due to
the de-risking strategy and the reimbursements of the Sovereign debt portfolio. novobanco’s security
portfolio remained substantially (more than 70%) composed of high-quality liquid assets (“HQLAs”),
and among these more than 60% are sovereign or supranational debt securities. Throughout the year
of 2021, due to the historically low level of sovereign and supra yields, the reinvestment of matured
securities did not prove to be more profitable than the maintenance of this liquidity at the ECB.
In terms of medium- and long-term funding, driven by the bank’s MREL requirements, in 2021
novobanco successfully concluded two senior preferred bond issues amounting in aggregate to
€575mn, a milestone for the bank’s return to the capital markets:
I.
in July the bank issued €300mn bonds maturing in 2024, with an early redemption option in 2023.
This bond issue was executed together with a liability management exercise consisting of a tender
offer and consent solicitation on its long-dated bond, in which novobanco acquired approximately
32% of the outstanding amount of its zero-coupon bonds for €161mn, corresponding approximately
to €88mn of book value. The replacement of these zero-coupon bonds by the new bonds will
improve the funding structure, as the new bonds are fully compliant with the MREL requirements
and will allow for relevant interest savings in the coming years.
II. in December novobanco returned to the markets with another senior preferred bond issue amounting
€275mn and with maturity in 2023 (early redemption in September 2022).
These two market transactions allowed the bank to comply with the MREL regulatory requirement, in
force since 1 January 2022.
MREL REQUIREMENTS
(%)
MREL RATIO
(% RWA; Preliminary)
TREA1
Combined Buffer
Total
O-SII (LSF Nani)
Total + O-SII
LRE4
Jan-22
14.64%
2.51%
17.15%
0.50%2
17.65%
5.91%
Jan-26
22.78%
n.a.3
22.78% + CBR
22.78% + CBR
5.91%
(1) TREA - Total Risk Exposure Amount;
(2) O-SII defined as LSF Nani Investments; as communicated by Banco de Portugal on its website on 30 Nov 2021, the O-SII increased from 0.375% to 0.5%:
O-SII requirement at novobanco is under analysis by the regulator;
(3) As of Jan-26 appicable combined buffer requirement;
(4) LRE - Total Leverage Exposure;
Other eligible ≥ 1 ano
Senior Unsecured ≥ 1 ano
Own Funds - Tier 2
18.0%
0.8%
4.1%
2.0%
Own Funds - Tier 1
11.1%
31-Dec-21
Additionally, in 2021: (i) the increase in the amount and maturity of the medium-term financing under the
TLTRO III by €950mn at YE to mitigate the negative impact of the reimbursement/maturity shortening
of outstanding TLTRO III amount on NSFR; and (ii) the Resolution’s Fund €429mn capital injection in
June and December, under the Contingent Capital Agreement, allowed a significant reinforcement of
the bank’s liquidity, as well as maintaining the stability of its funding structure.
In this context, novobanco maintained its liquidity buffer at very comfortable level. In December 2021,
the portfolio of eligible securities for rediscount with the ECB totalled €16.5bn (net of haircuts), a
slight €0.2bn reduction YoY. In addition to the abovementioned assets, novobanco has HQLA assets
non-eligible with the ECB and deposits at ECB, which makes-up to a total liquidity buffer of €12.5bn
composed by highly liquid assets (90%) at 31 December 2021, an increase of €1.2bn YoY.
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 16.7
16.5
2020
2021
EVOLUTION OF ELIGIBLE ASSETS AT THE ECB
(€bn)
16.7
16.5
2020
2021
EVOLUTION OF FUNDING FROM THE ECB
(€bn)
7.0
4.7
8.0
2.7
2020
2021
Gross Funding
Net Funding
novobanco thus maintained a comfortable liquidity position in 2021, reflected in the level of the
regulatory liquidity ratios: i) Liquidity Coverage Ratio (LCR) at 182% (vs. 140% in 2020) and ii) Net
Stable Funding Ratio (NSFR) 117% (vs. 112% in 2020) both above the regulatory requirements, and
showing an upward trend vis-à-vis 2020.
Overall, novobanco believes it has a well-balanced funding structure, which does not present significant
short-term liquidity or refinancing risks. The bank’s major funding concentration is the ECB funding,
€8bn on TLTRO III as of Dec 2021, which will start to mature in December 2022 (€1.6bn). Nevertheless,
taking into account the substantial cash deposits held with the ECB (more than €5bn as of the end of
2021), the absence of significant wholesale redemptions and the availability of diversified sources of
funding, currently also including market funding, the bank has a comfortable liquidity position and do
not expect major refinancing risks.
4.3 RISK MANAGEMENT
7.0
4.7
8.0
2.7
The definition of a risk management framework with standards, patterns, objectives and responsibilities
established for all areas of novobanco Group, permits to implement the strategy in compliance of the
established risk appetite.
2020
2021
Supporting top management in effective risk management and in the development of a strong risk
culture, this framework defines the following:
Gross Funding
Net Funding
• the main risks faced by the novobanco Group, as well as those to which it may be exposed
• the risk appetite requirements and their monitoring;
• the responsibility functions in risk management;
• the governance structures and risk management and control committees.
THE RISK CULTURE AT NOVO BANCO GROUP
Risk in implicit in the banking business. Consequently, the novobanco Group is naturally exposed to the
various classes of risk arising from external and internal factors according to the markets where the
bank operates and the activities it develops.
The novobanco Group considers that Risk Management is a key pillar for sustained value creation over
time.
The novobanco Group’s Risk management and control is therefore grounded on the following
assumptions:
•
Independence from the Group’s other units, and in particular risk-taking units;
• Universality, through application of the risk culture across the entire novobanco Group, through a
holistic and preemptive approach to risk;
• Three lines of defence model, viewing the adequate detection, measurement, monitoring and control
of all material risks to which the novobanco Group is exposed. This Model implies that all employees,
in their sphere of activity, are responsible for the management and control of risks.
57
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES RISK MANAGEMENT FRAMEWORK
1
2
3
4
5
6
1. GOVERNANCE
Risk management and control committees. Definition of Policies and roles and responsibilities.
2. RISK APPETITE STATEMENT
Definition of the level of risk that the Group is willing to take on
3. RISK CULTURE
Risk culture embedded at the various levels of the organisation making all employees accountable for risk management and control.
4. RISK CATEGORIES
Shared holistic vision of the Credit, Market, Liquidity and Operational Risk classes as well as of emerging risks (e.g., ESG risk).
5. RISK TOOLS
Stress testing, limits policy, model validation, quantification and evaluation methodologies.
6. 3 LINES OF DEFENCE
The pillar for effective and seamless risk management at the various levels of the Group.
3 LINES OF DEFENCE PRINCIPLE
1ST LINE OF DEFENCE
2ND LINE OF DEFENCE
3ND LINE OF DEFENCE
NOVO BANCO GROUP
Business Areas
Global Risk Department
Compliance Department;
Internal Audit Department
FUNCTION
LIMITATION
MISSION
Maximise return
Control
Takes risk according to Risk Appetite
Does not take risk
Accurate and timely identification of risks
Make sure that risk remains within defined limits
Measure, monitor, report
Independent review
Ensures adequacy of policies and
processes
Ensures correct implementation of
policies and processes
58
Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES A strong risk culture in the organisation is revealed by diligent, proactive and consistent compliance with
regulations, the code of conduct, values and risk appetite defined for all activities and risk exposures.
To this end, the timely identification of risk sources and risk-based mitigation and control actions are
fundamental.
RISK MANAGEMENT FUNCTION
The risk management function is organised in such a way as to allow effective management of the risks
considered relevant and material by the novobanco Group - those to which top management pays
special attention and which may impact the achievement of the objectives defined by the bank -, as
well as risks considered as emerging - those where little is known about their components, and whose
impact may occur over a longer time horizon.
The risks identified as relevant and material are quantified within the scope of the Internal Capital
Adequacy Self-Assessment (ICAAP) exercise, the most relevant being:
i. credit risk, which includes default, counterparty and concentration risk,
ii. liquidity risk,
iii. market risk in the trading book and banking book, which includes interest rate risk (IRRBB), equities
risk, credit spread risk, real estate risk and pension fund risk,
iv. operational risk, which includes operations risk, information systems risk, compliance risk, and
reputational risk, and
v. business risk.
Emerging risks, which are closely monitored by the risk structures, include, among others, ESG risks.
In particular, with regard to ESG risks, novobanco is finalising a specific risk assessment exercise, aimed
at a) understanding the (complex) transmission channels that link this category to the other risk
categories; b) assessing their likely impacts, taking into account different climate transition scenarios;
and c) strengthening the existing risk management and control practices.
ESG RISK MANAGEMENT
Approach to ESG risks
ESG risk management is integrated in the global sustainability framework of the novobanco Group,
which comprises the following elements:
• The group-wide sustainability strategy, which sets the objectives, targets, actions and respective
timings for the business areas; the internal governance, internal control and risk management
strategy; the internal activities (i.e., own operations) strategy; and the internal and external reporting
strategy.
• novobanco’s disclosure approach regarding its sustainability objectives, such as: a) reduction of
direct GHG emissions, in line with the global objectives of the Paris agreement; b) increased use
of ‘sustainable finance’ instruments, namely through the commercial offer and investment policies,
channelling direct financial support to the transition of the Portuguese economy; and c) adequate
management of climate transition risks, systematically identifying and controlling its main factors;
• A governance and operational structure specifically adapted to this strategy, ensuring the existence
in the first and second lines of internal organisation, of expertise and approaches/work plans directed
at ensuring the fulfilment of novobanco’s objectives.
This framework is directly led by the EBD, supervised by the GSB, with the participation of the EBD and
the departmental heads more closely involved in the definition and implementation of the sustainability
strategy.
At operational level, this framework is executed by dedicated work groups, which follow detailed action
plans to ensure the timely achievement of the established objectives, in alignment with the defined
strategy.
The developments at the level of the ESG risk component of the risk management system take place
within these organisational structures and have three primary objectives:
• Compliance with the new regulatory requirements, namely those concerning the disclosure of non-
financial information on the sustainability strategy and ESG risk management;
• Effective alignment with regulatory and supervisory expectations, with emphasis on a)
implementation of the European Central Bank (ECB) Guide on climate-related and environmental
risks (C&E) management; and b) participation in the ECB stress test exercises focused on C&E risks,
starting in 2022;
•
Implementation of enhanced procedures for ESG risk management, adjusted to the activity of
the novobanco Group, with emphasis on a) routines for global monitoring of ESG risk exposure;
b) integration in the business (commercial and financial) of specific controls for ESG risk factors,
conducting the origination and monitoring of risk exposures - including the necessary procedures
to implement the European Taxonomy for sustainable activities; and c) implementation of risk
assessment practices, considering sensitivity analysis or scenario methodologies.
ESG risk profile
The definition of ESG risks focuses on the potential negative impacts deriving from the current or
future effects of risk factors in clients and counterparties or in the bank’s assets and liabilities, that are
included in the current internal taxonomy of the novobanco Group, and in particular of climate change
impacts.
The group is currently in the process of reviewing and updating its risk taxonomy - as part of the internal
risk identification and assessment exercise - with the objective of recognising and reassessing the
materiality of the impacts of the climate and environmental, and social and governance risk components.
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES Implementation of the European Taxonomy for sustainable activities
Qualitative disclosures under Regulation (EU) 2020/852
Regulation (EU) 2020/852 (i.e., European Taxonomy Regulation) and Delegated Regulation (EU)
2021/2178, establish i) a regime for the promotion of sustainable finance, defining the criteria to
classify economic activities as sustainable from an environmental point of view and, ii) the content and
methodology for information disclosure by the institutions covered by the application of the European
Taxonomy.
novobanco has been taking the necessary steps towards alignment with the taxonomy criteria, namely
by a) assessing and controlling the eligibility of its operations; and b) determining the operational
requirements in terms of collection, confirmation and analysis of information - with its clients.
In line with the applicable requirements, and in particular with article 10 of the European Taxonomy
Regulation, the novobanco Group complies with the following mandatory disclosures12:
• The proportion in its total assets of exposures to Taxonomy non-eligible and Taxonomy-eligible
economic activities;
• The proportion in its total assets of the exposures referred to in Article 7 (1 and 2) of the Regulation;
• The proportion in its total assets of the exposures referred to in Article 7(3) of the Regulation;
• The qualitative information referred to in Annex XI of the Regulation.
Quantitative disclosures under Regulation (EU) 2020/852
Requirements of Article 10 of the European Taxonomy Regulation, paragraph 2:
Euros
Total assets13
Of which the proportion of the trading portfolio and on
demand inter-bank loans in total assets.
Exposures to central governments, central banks and
supranational issuers
Exposures to derivatives
Exposures to companies not subject to the Non-
financial Reporting Directive14
Eligible
Non-eligible
Total
% of total assets
---
---
---
---
100%
44 943 252 450
0.95%
427 460 000
14.76%
6 632 101 922
0.59%
263 199 000
15.77%
7 085 810 507
Contextual information in support of the quantitative indicators
The data reported in the previous section relate to consolidated financial information, collected directly
from the systems of the novobanco Group with reference to 31 December 2021.
Taking into consideration the European Commission guidelines (FAQs), the reporting of information
based on estimates is only provided on a voluntary basis. The sector-specific information used, even
if collected directly from the Bank’s clients and maintained in its information system, is considered an
estimate. Thus, and considering the timetable for application of the European Taxonomy Regulation
to the non-financial sectors, factual information that would allow compliance with the eligibility
requirements is not yet available.
With regard to the scope of application of the Non-Financial Reporting Directive (NFRD), the novobanco
Group does not yet have complete information, collected from its clients, that would allow it to classify
its positions in terms of the application of the NFRD.
Therefore, the NFRD coverage analysis resorted to external databases to obtain: a) a list of companies
classified as Public Interest Entities (PIE) and, therefore, obliged to apply the NFRD; and b) number of
employees. In addition, the transparency reports of the main national audit firms were also analysed to
confirm this information.
Description of the compliance with Regulation (EU) 2020/852 in the financial
undertaking’s business strategy, product design processes and engagement with clients
and counterparties
As described in the previous chapters, the novobanco Group has been implementing a group-wide
sustainability strategy, which comprises the operational implementation of the European Taxonomy,
focusing on the following elements:
• Adoption of the Taxonomy, based on estimates, to ensure regular monitoring of new production and
balance sheet exposures;
• Definition of operational requirements for the implementation of the Taxonomy in lending and
investment processes, including: a) establishment of principles of segmentation of clients and
operations, to enhance the definition of the information to be collected; b) controls to be carried
out on the information provided by the clients; and c) adaptation of the information system for the
collection and maintenance of the Taxonomy indicators;
• Establishment of monitoring and dissemination practices of legal and regulatory changes, with a view
to the timely adoption of the developments still expected in the field of the European Taxonomy.
12. According to the European Commission’s clarifications (December 2021 FAQ), eligibility estimates may only be reported on a voluntary basis. Bearing in mind the timetable for implementation of the European Taxonomy, particularly with regard to the non-financial business sector, no
information is yet available (e.g., prepared by novobanco’s clients) to enable eligibility reporting on a factual basis.
13. O total de ativos refere-se ao valor do balanço do Grupo novobanco, segundo consolidação prudencial e não ao total de ativos enquadráveis no rácio de ativos ecológicos (i.e., GAR%, na definição inglesa).
14. Considers companies that, due to their size, are not covered by the NFRD (i.e., SMEs). The eventual exemption of companies outside the Eurozone was not considered.
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES RISK MANAGEMENT IS CONSIDERED VITAL FOR THE GROUP
Risk Management, being vital for the development of NBG’s activity, is centralised in the Risk
Management Function, which comprises the Global Risk Department (GRD) and the Rating Department
(RTD). It defines holistic principles for risk management and control, in close coordination with the
remaining 2nd line units of novobanco Group, and with the Internal Audit Department. Moreover,
the Risk Management Function continuously monitors and assesses ESG Risks in close coordination
with the Sustainability area (DDAE- Strategy Development and Implementation Department), which
contributes specific knowledge to the understanding of climate and environmental risk factors and
social risk factors.
EBD, GSB, Risk Committees and specialised committees), which are responsible for supervising,
monitoring, assessing and defining the Risk Appetite and control principles implemented.
At operational level, the GRD centralises novobanco Group’s Risk Management Function, namely
in terms of the responsibilities inherent to the function, supervising the Group’s various materially
relevant financial institutions and ensuring independence vis-à-vis the business areas.
The Head of novobanco Group’s Risk Management Function is the Head of the GRD. To ensure maximum
efficiency in the articulation with the GRD, a local Risk Function Officer has been appointed in each
relevant entity of the novobanco Group. The GRD acts either directly or as coordinator, in articulation
with the units in charge of the local Risk Management Function.
All materially relevant risks are reported to the Management and Supervisory bodies (as applicable,
The Risk Appetite framework defines:
The material risks
to which NBG
is exposed
The risk
appetite
statements
The roles
and responsibilities
in risk management
The organisation
and function
in risk management
Governance
and risk decision-taking
and monitoring committees
This framework aims to ensure compliance with the strategy of maximising value for the Client - one of the relevant stakeholders along with employees, shareholders and the community -, protecting the strength
of the organisation through rational and solid risk management.
Risks
Concept
Management
Risk Appetite
Focus in 2022
Credit
The risk of financial loss arising from
the failure of a borrower or
counterparty to honour the
contractual obligations established
with novobanco within the scope of its
lending activity.
Management and control of risks of
this nature are based on an internal
risk identification, assessment and
quantification system, as well as on
internal processes for assigning
ratings and scorings to portfolios and
their continuous monitoring in
specific decision forums.
Conservative risk appetite.
Reinforcement of the bank's
operational capacity to manage credit
exposures in the post-moratoria
context, identifying early signs of
financial deterioration and defining
strategies for timely action on viable
debtors in need of support measures
to ensure their adequate debt service.
Reinforcement of remote service
models and creation and development
of automated credit assessment and
decision tools.
Reinforcement of the continuous
monitoring processes of the various
loan portfolios.
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Concept
Management
Risk Appetite
Focus in 2022
Liquidity
The current or future risk deriving from
an institution’s inability to satisfy its
commitments as they mature, without
incurring excessive losses.
Based on the measurement of
liquidity outflows from contractual
and contingent positions in normal or
stress situations, the management
and control of this risk consists, on
the one hand, in determining the size
of the liquidity pool available at any
given time and, on the other hand, in
planning for stable sources of funding
in the medium and long term.
Solid liquidity position.
Funding of medium- and long-term
assets through stable liabilities.
Withstanding liquidity stresses for a
minimum of 12 months.
Compliance at all times with the limits
imposed by the legislation in force.
Maintenance of risk control monitoring
and management processes, ensuring
the timely detection of changes in the
risk profile, and the bank’s aligned
compliance with the established risk
appetite.
To be continuously updated on the
regulatory framework.
Market
The risk of a potential loss resulting
from an adverse change in the value of
a financial instrument due to
fluctuations in interest rates, foreign
exchange rates, equity prices,
commodity prices, real estate prices,
volatility and credit spreads.
A GRD expert team centralises the
management and control of NBG’s
market risk and interest rate risk on
the banking book (IRRBB), in line with
the regulations and risk good
practices.
Monitoring of net interest income,
market Investments as well as
balance sheet interest rate risk
through predefined risk appetite rules.
Processes for continuous monitoring of
market risks allowing to assess the
impact of changes in market factors,
namely volatility and interest rate
levels.
Development and maintenance of
internal models and stress testing
exercises to measure and control
market risk and IRRBB, as well as
calculation of economic capital under
ICAAP and regulatory capital under the
Fundamental Review of the Trading
Book.
To be continuously updated on the
regulatory framework.
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Concept
Management
Risk Appetite
Focus in 2022
Operational
The risk of occurrence of events with
negative impacts on results or equity,
resulting from inadequacies or
weaknesses in procedures or
information systems, staff behaviour,
or external events, including legal risk.
Operational risk is, therefore,
understood to be the sum of the
following risks: Operations,
Information Systems, Compliance and
Reputational.
A GRD expert team defines the
Operational Risk Policies, with other
units, namely the Compliance
Department and the Information
Security Office issuing specific risk
Policies.
The effectiveness of operational risk
identification and control
methodologies is ensured though the
activity of the operational risk
management Representatives
appointed for each organisational
Unit, who promote the risk culture in
the first line of defence in continuous
collaboration with the GRD.
The operational risk appetite defined
for the novobanco Group covers the
various categories under this risk. This
appetite reflects the infeasibility of
eliminating operational risk from a
cost-benefit perspective as well as
novobanco Group’s high ethical and
conduct standards, thus implying zero
tolerance for breaches of conduct.
ESG Risk
Risks of occurrence of financial losses
arising from current or future impacts
of ESG factors on novobanco's clients,
counterparties or assets.
ESG factors are climate and
environmental, social or governance
issues that may have a positive or
negative impact on the financial
performance or solvency of an entity,
institution or person.
The management of ESG risk results
from the joint approach of specialised
teams from the GRD, RTD, and DDAE,
which define the guidelines to be
followed for any new business and for
monitoring existing positions, in order
to minimise novobanco’s exposure, in
particular to transition risks and
physical risks.
In addition, it is supported by
methodologies to assess and monitor
the risk factors, which, consistently
with the applicable regulations, allow
novobanco to monitor the evolution
of the risk profile of its balance sheet
positions.
Application of specific exclusion and
safeguard policies, namely for
activities with higher ESG risk (in the
environmental, social and governance
dimensions).
Definition of global goals and
guidelines to steer new credit
production according to ESG
assessment criteria;
Implementation of global risk
assessment methodologies, at the
level of the credit portfolio, to identify
and monitor the main ESG risks on the
balance sheet.
Reinforcement of compliance with the
established risk appetite;
Strengthening of the risk culture,
particularly in the first line of defence,
as support for action and decisions
aligned with the risk strategy and
appetite across the various levels of
the organisation, promoting a more
robust control of risk.
Strengthening of the Fraud Risk
framework in light of the increased
sophistication of fraud typologies, in
particular cyber risk, by enhancing the
prevention and control mechanisms.
Updating of the identification and
assessment methodologies for
non-financial risks, to include ESG risk.
Participation in the ECB's climate risk
stress test exercise, which will
strengthen the understanding and
anticipation of the impacts of these
risks;
Application of the criteria established
by the EU Taxonomy (and applicable in
2022), allowing the first
characterisation of the bank's
portfolios;
Reinforcement of the integration
between ESG risk methodologies and
business planning and execution,
namely regarding the implementation
of risk classification methodologies
(Ratings & Taxonomy) and respective
guidance on credit decision and
monitoring.
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES 5.0
CORPORATE
GOVERNANCE
5.1 Shareholder Structure
5.2 Corporate Bodies: Composition and Functioning
5.3 Internal Control
5.4 Main Policies
5.5 Credit to Members of the Corporate Bodies
5.6 Remuneration of the Members of the Corporate Bodies
And Identified Staff
5.7 Securities Held by Members of the Management and
Supervisory Bodies
5.8 Non-Material Indirect Investment in Novo Banco
Rui Duarte
South Retail Department - Senior Business Client Manager
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5.1.1 Qualified holdings in Novo Banco’s share
capital
The share capital of Novo Banco totals €6,054,907,314 (six billion, fifty-four million, nine hundred
and seven thousand, three hundred and fourteen euros), divided into 9,954,907,311 (nine billion,
nine hundred fifty-four million, nine hundred and seven thousand, three hundred eleven) nominative
dematerialised shares with no nominal value, fully subscribed and paid up.
Qualified holdings in Novo Banco’s share capital on the date of signature of this Report:
SHAREHOLDER
NUMBER OF SHARES
% OF SHARE CAPITAL
Nani Holdings S.G.P.S., S.A.
7 466 180 483
75.00%
Fundo de Resolução
2 333 819 514
23.44%
Direcção-Geral do Tesouro e Finanças
154 907 314
1.56%
5.1.2 Equity holders with special rights
There are no shareholders with special rights.
5.1.3 Restrictions on voting rights
By virtue of the commitments assumed by the Portuguese State before the European Commission
in the context of the approval of the sale of a 75% holding in the share capital of Novo Banco under
European Union rules on State aid, the shareholder Resolution Fund should refrain from exercising its
non-economic rights, namely its voting rights.
5.2 CORPORATE BODIES:
COMPOSITION AND
FUNCTIONING
5.2.1 Composition and functioning of the
management and supervisory corporate bodies and
changes in the Company’s Articles of Association
Under the terms of the Company’s articles of association, the corporate and statutory bodies of
novobanco are the Shareholder’s General Meeting, the General and Supervisory Board, the Executive
Board of Directors, the Monitoring Committee, the Statutory Auditor and the Company’s Secretary.
The members of the corporate bodies are elected for four-year mandates and they may be re-elected
once or more than once.
Also in accordance with the Articles of Association, the members of the Board of the Shareholder’s
General Meeting, General and Supervisory Board, and Monitoring Committee are elected by the
Shareholder’s General Meeting. The Shareholder’s General Meeting also has the powers to appoint and
replace the bank’s Statutory Auditor, acting upon a proposal of the General and Supervisory Board,
based on a proposal of the Financial Affairs (Audit) Committee. The members of the Executive Board of
Directors are appointed by the General and Supervisory Board. The Company’s Secretary and Alternate
Secretary are appointed by the EBD, after consulting with the GSB.
5.2.2 Amendments to the Articles of Association
Changes to novobanco’s Articles of Association are the responsibility of the Shareholder’s General
Meeting.
In December 2021, an amendment was made to the Articles of Association of Novo Banco with regard
to Article 4 (Share Capital and Shares), which has the following wording:
“1. The share capital of Novo Banco totals €6,054,907,314 (six billion, fifty-four million, nine hundred
and seven thousand, three hundred and fourteen euros), divided into 9,954,907,311 (nine billion,
nine hundred fifty-four million, nine hundred and seven thousand, three hundred eleven) nominative
dematerialised shares with no nominal value, fully subscribed and paid up.”
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The GSB is the supervisory body of novobanco and its members are elected by the Shareholder’s
General Meeting.
In October 2020, the General Meeting of novobanco appointed the following members of the General
and Supervisory Board for the 2021-2024 mandate:
Byron James Macbean Haynes – Chairman
Benjamin Friedrich Dickgiesser
Karl-Gerhard Eick – Vice-Chairman
John Ryan Herbert
Donald Quintin
Kambiz Nourbakhsh
Mark Andrew Coker
Robert Alan Sherman
Carla Antunes da Silva
William Henry Newton
All members of the previous term were reappointed for the new term, adding a 10th member to the
CGS with the appointment of William Henry Newton, for his first term (2021/2024). Thus, the CGS is
now composed of 10 (ten) members.
These Committees are composed of and chaired by independent members of the General and
Supervisory Board. Their meetings may also be attended by members of the Executive Board of
Directors responsible for the matters that are dealt with by said committees.
> Financial Affairs (Audit) Committee
The Financial Affairs (Audit) Committee has monitoring and supervision responsibilities concerning the
financial performance of the bank and other financial entities included in the prudential consolidation
perimeter, the accounting and accounts reporting policies and procedures and the follow-up of the
external auditor, and in particular, has the powers provided for in the Companies Code.
This Committee also has delegated powers of the General and Supervisory Board with regard to, among
others, material changes to accounting policies, the approval of the annual budget, and prior consent
to the issuance of certain debt instruments.
In addition, this Committee supports the General and Supervisory Board in overseeing the effectiveness
of the internal control system, risk management system and internal audit system of the bank and of
the financial companies within its scope of prudential consolidation.
At the signature date of this Report the members of the Financial Affairs (Audit) Committee are the
following:
At the date of this Report, 6 (six) of the 10 (ten) members of the General and Supervisory Board,
including its Chairman, are independent.
Chairman: Karl-Gerhard Eick
The General and Supervisory Board has the powers vested upon it by law and by the Articles of
Association, having as main functions to regularly monitor, advise and supervise the management
of novobanco and of the Group companies, as well as to supervise the Executive Board of Directors
with regard to compliance with the relevant regulatory requirements of banking activity. Additionally,
the General and Supervisory Board has specific powers to elect the members of the Executive Board
of Directors and responsibilities in granting previous consents for approval by the Executive Board
of Directors of certain matters established in the Articles of Association, namely in what concerns
the approval of (i) credit, risk and accounting policies, (ii) business plan, budget and activity plan, (iii)
change of registered address, and closure or changes to representation structures abroad, (iv) capital
expenditure, debt or refinancing, sales or acquisitions, creation of liens or granting of loans above
certain limits and within certain conditions, (v) practice or omission of any material act related with the
Contingent Capital Agreement; and (vi) hiring of employees with annual remuneration above certain
limits.
The General and Supervisory Board holds meetings on a monthly basis. The Chairman of the General
and Supervisory Board and the Chief Executive Officer maintain regular, and at least weekly, dialogue
and communication between them.
In its activity, the General and Supervisory Board is directly supported by 5 (five) Committees, the
Financial Affairs (Audit) Committee, the Risk Committee, the Compliance Committee, the Nomination
Committee and the Remuneration Committee, these holding the legal required powers and other
powers delegated to the General and Supervisory Board.
Byron James Macbean Haynes
Kambiz Nourbakhsh
> Risk Committee
The Risk Committee advises and supports the General and Supervisory Board in monitoring the bank’s
actual and future global risk appetite and risk strategy as well as the effectiveness of the internal
control system and risk management system of the bank and the financial companies included in its
prudential consolidation perimeter.
This Committee also has the powers provided for by law and the delegated powers of the General and
Supervisory Board with regard to certain credit transactions and changes in risk policies.
At the signature date of this Report the members of the Risk Committee are the following:
Chairman: William Henry Newton15
Byron James Macbean Haynes
Karl-Gerhard Eick
Kambiz Nourbakhsh
Benjamin Friedrich Dickgiesser
15. Became Chairman of Risk Committee in April 2021, after F&P approval by the regulatory authorities
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The Compliance Committee advises and supports the General and Supervisory Board, among others, in
monitoring compliance issues pertaining to the bank, the members of corporate bodies and employees,
internal policies and processes related to compliance, policies on business conduct and ethics, and
compliance and reputational risk.
In addition, it has delegated powers in matters related to related parties (except for transactions
between the bank and shareholders and their related parties, a non-delegable matter that falls to the
General and Supervisory Board).
The above functions also extend to the following financial subsidiaries: BEST, novobanco Açores and
GNB Gestão de Ativos.
At the signature date of this Report the members of the Compliance Committee are the following:
Chairman: Robert Alan Sherman
John Ryan Herbert
Mark Andrew Coker
> Nomination Committee
The Nomination Committee supports the General and Supervisory Board in overseeing the Executive
Board of Directors’ action in the establishment of, and in ensuring compliance with, consistent and well-
integrated nomination policies at the bank and the following financial subsidiaries: BEST, novobanco
Açores and GNB Gestão de Ativos companies.
At the signature date of this Report the members of the Nomination Committee are the following:
Chairman: John Ryan Herbert
Robert Alan Sherman
Donald John Quintin
Mark Andrew Coker
Carla Antunes da Silva
> Remuneration Committee
The Committee advises and supports the General and Supervisory Board in the establishment of
adequate, consistent and well-integrated remuneration policies in the bank and in monitoring the
implementation of remuneration policies in the bank and in its financial subsidiaries BEST, novobanco
Açores and GNB Gestão de Ativos companies.
This Committee also has several delegated powers, including with regard to the remuneration of the
members of the CAE and identified employees, as well as to the hiring of employees with annual
remuneration above €200,000.00.
At the signature date of this Report the members of the Remuneration Committee are the following:
Chairman: Byron James Macbean Haynes
Karl-Gerhard Eick
Benjamin Friedrich Dickgiesser
The company documents and main regulations can be accessed at www.novobanco.pt > Institutional
> Governance > Company Documents
5.2.4 Executive Board of Directors
The members of the Executive Board of Directors (EBD) are appointed by the General and Supervisory
Board, which also appoints the Chief Executive Officer (CEO).
Regarding the composition of the EBD, the members of the EBD in office at the date of this report
(identified in point 1.2 Who We Are - Organisation) are the following:
António Manuel Palma Ramalho
Chief Executive Officer
Luísa Marta Santos Soares da Silva Amaro de Matos
Chief Legal & Compliance Officer
Mark George Bourke
Chief Financial Officer
Rui Miguel Dias Ribeiro Fontes
Chief Risk Officer
Luís Miguel Alves Ribeiro
Chief Commercial Officer (Retail)
Andrés Baltar Garcia
Chief Commercial Officer (Corporate)
In 2021, there were no changes to the composition of the Executive Board of Directors.
Committees of the Executive Board of Directors
The activity of the EBD is supported by several Committees. In accordance with its rules of procedure,
the EBD may establish committees to complement its own management activity, ensuring the
monitoring of the bank’s activity in areas that are considered relevant.
> Risk Committee
Responsible for issuing an opinion on, approving, under the powers delegated by the Executive Board
of Directors, and monitoring novobanco Group’s policies and risk levels. In this context, the Risk
Committee is responsible for monitoring the evolution of GNB’s integrated risk profile, and for analysing
and proposing methodologies, policies, procedures and instruments to deal with all types of risk, namely
credit, market, liquidity and operational.
Chairman: Rui Fontes
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> Impairment Committee
Responsible for deciding the main credit operations in which the novobanco Group participates, in line
with the risk policies defined for novobanco Group.
Responsible for defining the amount of impairment to be allocated to each client, when novobanco has
an exposure above €100 million to that client or group of clients.
Chairman: António Ramalho
Chairman: Rui Fontes
> Capital, Assets and Liabilities Committee (CALCO)
Responsible for the definition of the balance sheet management policies (capital, pricing, and interest
rate, liquidity and foreign exchange risk) and for monitoring their impact at novobanco Group level. The
CALCO also monitors early warning indicators with regard to the Recovery Plan and Liquidity, proposing
mitigation measures, and if necessary, triggering the recovery plan and/or the liquidity contingency
plan.
Chairman: Mark Bourke
> Internal Control System Committee
The Committee monitors all issues related to novobanco Group’s Internal Control System, without
prejudice to the responsibilities attributed in this regard to the Executive Board of Directors and
other Committees in place at novobanco Group, namely the Risk Committee, the Operational Risk
Subcommittee and the Compliance and Product Committee.
Chairman: Rui Fontes
> Compliance and Product Committee
Responsible for approving, from a compliance standpoint, products and services to be developed and/
or distributed by the bank, issuing an opinion on all of them within the scope of the products’ sign-off
process in force, as well as monitor the issues related to control implementation, without prejudice of
competences of other governing bodies and GSB Committees.
Chairwoman: Luísa Soares da Silva
> Digital Transformation Committee
Responsible for defining and driving digital transformation at novobanco.
Chairman: António Ramalho
> Costs and Investments Committee
Responsible for approving the execution of expenses, within the limits of the powers conferred upon it.
Its objectives include the definition of an annual expenditure plan and the revision of the acquisition’s
strategy.
Chairman: Mark Bourke
In addition, the Executive Board of Directors has set up 3 (three) subcommittees, (i) Non-Performing
Assets (NPA) Subcommittee; (ii) Extended Models Risk Subcommittee; (iii) Operational Risk
Subcommittee and 7 (seven) steering groups for the areas of (i) Retail, (ii) Corporate Clients, (iii) Human
Capital, (iv) Management Information System (MIS), (v) Investment, (vi) Business Monitoring and (vii)
ESG. The Steering Groups have no rules of their own, their composition and rules of procedure being
decided on a case-by-case basis by the members of the Executive Board of Directors.
5.2.5 Monitoring Committee
The Monitoring Committee is a statutory advisory body ruled by the Articles of Association and deriving
from the CCA. It is composed of three members elected by the Shareholders’ General Meeting, one of
whom to act as Chairman. The composition of the Monitoring Committee must respect the following
criteria: one of its members must be independent from the parties to the CCA, and another shall be a
registered charter accountant. Two of its members are appointed by the Resolution Fund.
The Committee has as main tasks to discuss and issue (non-binding) opinions on any Relevant Issue
concerning the CCA upon which it is requested to issue an opinion. The members of the Monitoring
Committee are entitled to attend as observers and speak (but note vote) at all meetings of the GSB.
5.2.6 Supervision
Supervision is the responsibility of the General and Supervisory Board and the Statutory Auditor.
The Statutory Auditor and Alternate Statutory Auditor are elected and removed by the Shareholders’
General Meeting, under a proposal of the General and Supervisory Board, on a proposal from the
Financial Affairs (Audit) Committee, and have the powers and responsibilities provided for in the law.
5.2.7 Powers of the management body
Including regarding resolutions on share capital increases
The Executive Board of Directors is the corporate body in charge of the management of the bank. Under
the law and the Articles of Association, and respecting the powers of the other corporate bodies, it is
responsible for defining the general policies and strategic objectives of the bank and of the group and
for ensuring the activity not comprised within the functions of other bodies of the bank, in compliance
with the rules and standards of good banking practice.
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shares or securities granting subscription rights, such decisions being the exclusive responsibility of
the Shareholders’ General Meeting. In the case of securities’ issuance, it requires the prior opinion of
the GSB.
5.3 INTERNAL CONTROL
DEFINITION AND OBJECTIVES
Internal Control is integral to the running of the organisation, combining strategies, policies, processes,
systems and procedures to ensure the medium- and long-term sustainability of the institution and the
prudent exercise of its activity.
An efficient and effective internal control system is key for the organisation to ensure:
• The fulfilment of the objectives set out in strategic planning, through the efficient execution of
operations, the efficient use of the institution’s resources and the safeguarding of its assets;
• The proper identification, assessment, monitoring and control of the risks to which the institution is
or may come to be exposed;
• The existence of comprehensive, relevant, reliable, and timely financial and non-financial information;
• The adoption of solid accounting principles;
• Compliance with the legislation, regulations and guidelines applicable to the institution’s activity,
issued by the competent authorities, with the institution’s own internal regulations, and with
professional and ethical standards and practices and with rules on conduct and relationship with
clients.
Internal Control concerns all the members of the management and supervisory bodies, and Institution’s
employees, who perform their duties in accordance with internal policies and standards of ethics,
integrity and professionalism, also applying to the structural units responsibilities and to all the
institution’s business segments, outsourced activities, and product distribution channels.
Control System, with a clear organisational structure and independent and efficient functions in terms
of risk management, compliance and audit.
In turn, it is incumbent upon the General and Supervisory Board, among other duties detailed in
the bank’s Articles of Association, to ensure that the Executive Board of Directors establishes and
maintains adequate, independent and effective internal control, in compliance with the law, regulations
and internal policies.
novobanco Group’s Internal Control System is consistently implemented across all the financial entities
of the Group where management control exists, without prejudice to additional requirements of host
territories and of the specificities of the functions involved in the System.
GENERAL PRINCIPLES
In order to effectively achieve the defined objectives, novobanco Group’s Internal Control System is
based on the following principles:
• Adequate control environment reflecting the importance recognized by novobanco Group for the
Internal Control System and whose organization is supported by a model of 3 lines of defence, which
defines the levels of responsibility in terms of governance and risk management for the different
functions that integrate each line, including permanent, independent and effective Internal Control
functions;
• Solid risk management system, designed to identify, assess, monitor and control all risks that may
influence the strategy, risk appetite and objectives of novobanco Group (as detailed in section 4.3
– Risk Management);
• Efficient information and communication system that guarantees the capture, treatment and
exchange of relevant, reliable, complete, comprehensive and consistent information, in a timely
manner and in a way that allows effective and timely management and control of the activity and
the inherent risks;
• Effective monitoring process, implemented to ensure the adequacy and effectiveness of the
Internal Control System over time, ensuring in particular the timely identification of any deficiencies
and opportunities for improvement that will enable the Internal Control System to be strengthened,
promoting the triggering of corrective actions.
Under novobanco Group’s Internal Control System, policies, processes, procedures, systems and
controls are formalised in internal standards, process catalogues, internal control manuals, presentations
supporting the main committees involved in the management of risk, information and communication,
control function reports, and in the Annual Self-assessment Report itself.
Each employee has a role to play as well as duties and responsibilities, which contribute to ensure the
efficiency and effectiveness of Internal Control.
3 LINES OF DEFENCE MODEL
The Executive Board of Directors is the body with ultimate and global responsibility for the institution
and that which defines, supervises and is responsible for the implementation of an adequate Internal
The Internal Control System is grounded on the 3 lines of defence model, which clearly defines the
levels of intervention and responsibility in risk management and in the execution of controls, in order to
guarantee the adequacy and overall effectiveness of Internal Control within in the organisation.
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EXECUTIVE BOARD OF DIRECTORS
Internal Control System
3RD LINE OF DEFENCE
Assessment of the adequacy and effectivness of control
Audit function
2ND LINE OF DEFENCE
Risk and Control Monitoring
1ST LINE OF DEFENCE
Risk Management
Control function (Risk and Compliance)
Other functions
Businesse function
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The 1st line of defence is held by the organisational units that daily assume and manage the risk of
their activities, of the IT processes and systems they sponsor, and of the outsourced activities under
their responsibility, within pre-established limits set by the Executive Board of Directors.
These units are responsible for the continuous identification, assessment and control of risks in the
activities under their responsibility. It is up to them to defend the institution from taking risks that
are not duly mitigated. Maintaining effective internal controls and conducting established control
procedures is also their responsibility.
The mission of the 2nd line of defence is to maintain the bank within its risk limits by controlling,
measuring and monitoring risks and reporting any deviations relative to the risk policies in force. This
line of defence comprises the “Risk Management” and “Compliance” Control Functions, for which the
Global Risk and the Rating Departments, and the Compliance Department are respectively responsible,
being complemented by activities carried out by other departments of the bank (e.g., Accounting,
Consolidation and Taxation Department, Internal Control and Data Protection Department, Chief
Information Security Officer).
The 2nd line of defence defines risk management and control policies, methodologies and tools,
exercising functional supervision and monitoring over the effectiveness of the 1st Line, controls legal
and regulatory compliance, and reports to the bank’s management and supervisory bodies as well as
to the competent external authorities, when applicable.
The 3rd line of defence is held by the Internal Audit Department, and its mission is to assess,
independently and based on risk, the adequacy and effectiveness of the entity’s organizational culture
and its governance and internal control systems.
To ensure its necessary independence, the internal audit function:
• Reports functionally to the Financial Affairs (Audit) Committee of the General and Supervisory
Board, and administratively (i.e., daily operations) to the Chief Executive Officer;
• Performs its activity in accordance with a pre-established plan and a risk-based approach. This
plan is approved by the Financial Affairs (Audit) Committee and acknowledged by the General and
Supervisory Board;
• Cannot have any kind of responsibility or authority over the design, implementation and execution
of the control procedures which it audits.
The Executive Board of Directors may request information and opinions from the internal audit function,
namely in matters of risk, internal control and compliance.
Additionally, and as external intervenient in the defence of the Internal Control System (4th line of
defence):
• the Statutory Auditor, bearing in mind its functions, acts as an additional line of defence, essentially
of an account’s supervision nature, including within the scope of the internal control report; and
• the Supervision Authorities (European Central Bank and Banco de Portugal) act as the last line of
defence, monitoring and promoting compliance with prudential rules at financial level and at the level
of people, incentives schemes, governance structures, systems and processes. The intervention of
the supervision authorities does not exempt the institution from its responsibility of ensuring sound
and prudent management and compliance with the prudential rules.
This line of defence external to the bank promotes a strong risk culture as well as a more efficient risk
management within the parameters institutionally defined for the purpose. In this context, these
entities contribute in the following manner: (i) they provide guidelines/recommendations and supervise
the governance of the bank, including through detailed assessments and regular interaction with
the Executive Board of Directors and top management; (ii) request improvements and remediation
measures, when and if necessary.
Control Functions Independence
The independence of the control functions is ensured through implementation of the following
mechanisms:
•
Internal authority: the functions are established at an appropriate hierarchical level and report
hierarchically to the Executive Board of Directors and functionally to the General and Supervisory
Board and respective committees, regularly participating in the meetings of these bodies;
• Head of function: the person responsible for the control function does not carry out activities in
business or support areas that are subject to control;
• Human Resources: the employees allocated to these functions only perform control functions and
are independent of the negotiation and support units that they supervise and control. However,
they are not isolated from them, and are familiar with their activity. The control functions have an
adequate number of qualified employees (at both the bank and in its branches and subsidiaries);
• Remuneration: the remuneration of control function employees is not linked to the results of
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the activities which they supervise and control, nor does it compromise, in any other way, their
objectivity;
• Technical resources and organisation: the functions have adequate technical resources at their
disposal and are organisationally independent from each other;
• Scope: the bank’s control functions carry out supervision activities over the control functions of its
branches and subsidiaries.
5.4 MAIN POLICIES
For novobanco Group, the legal framework that regulates its activities is as decisive for its course of
action as the set of values, principles and good practices which it assumes and which steer its actions
and define the standards that shape the manner in which the Group does business and carries out its
activities. The existence and application of a Code of Conduct, policies on the Prevention of Conflicts
of Interest, a Whistleblowing Policy and an Anti-Bribery and Anti-Corruption Policy are therefore
paramount across the entire novobanco Group. Additionally, but no less importantly, the scrutiny and
transparency requirements of the Related-Party Transactions Policy, the strict application of the Law
and Policies on the Prevention of Money Laundering and Terrorist Financing, the care and transparency
towards clients and investors derived from the Investor Protection and Market Transparency Policies,
and the assurance of sound and prudent management ensured by the Remuneration Policies for the
Management and Supervisory Bodies and for the Employees, altogether provide evidence of the
importance that novobanco attributes to the compliance culture dimension.
The commitment assumed by novobanco Group focuses on the prevention, detection, reporting and
management of situations involving risks of conduct or irregular conducts, based on principles of
integrity, honesty, diligence, competence, transparency and fairness.
> CODE OF CONDUCT
The novobanco Group Code of Conduct came into force in 2015 and was revised and updated in 2021.
The code applies to all the members of the management and supervisory bodies of the novobanco
Group companies, to the employees of Novobanco and the novobanco Group companies, and also to
providers of goods and services when such is contractually provided for, or mandatorily in the case
of some outsourced services. The Code of Conduct promotes a set of rules and good practices to be
followed by the employees in their relationship with the clients and with the bank itself and aims to
ensure that everyone knows the ethical and professional principles and standards that should guide
their performance and is aware of the need and importance to follow them so as to ensure that the
interests of shareholders, employees and clients are at all times respected.
The Code of Conduct is available at novobanco’s website, in Portuguese and English, at www.
novobanco.pt > Institutional > Governance > Compliance > here.
Monitoring the application of the Code of Conduct and clarifying employees’ doubts about its content
and application is the responsibility of the Compliance Department.
In 2021, in novobanco, as a result of non-compliance with internal regulations in the performance of their
duties, 9 employees received sanctions, namely: 4 dismissal without any indemnity or compensation; 2
cases of days of suspension without pay and with loss of seniority; and 3 registered reprimands.
> POLICY OF CONFLICTS OF INTEREST
The Policy of Conflicts of Interest establishes rules on the identification, management and monitoring of
potential conflicts of interest in the various activities of novobanco and the novobanco Group, but also
with respect to their corporate bodies, employees, and ultimately, their suppliers. It enables compliance
with the applicable legal and regulatory provisions, namely Aviso nº3/2020 of Bank of Portugal, as well
as with the recommendations of the European Central Bank, the European Banking Authority (EBA),
and the Securities and Exchange Commission (CMVM), and seeks to ensure that any possible situation
of conflict of interests identified is recorded, assessed, and, as the case may be, mitigated or, at limit,
abstaining from action, by the group, the bank and its agents.
The Conflicts of Interest Policy, revised in 2021, is available at novobanco ‘s website, in Portuguese and
English, at www.novobanco.pt > Institutional > Governance > Compliance
> RELATED-PARTY TRANSACTIONS POLICY
Novobanco’s Related-Party Transactions Policy sets down rules aimed at identifying transactions
concluded between novobanco and its Related Parties and at ensuring that the bank complies with
several provisions and regulations, namely the Bank of Portugal’s Notice no. 3/2020, the European
Banking Authority (EBA) Guidelines on Internal Governance (EBA/GL/2017/11), and Articles 85 and
109 of the General Law on Credit Institutions and Financial Companies.
In this context, the control system implemented identifies those involved in transactions contracted
with the bank, in strict compliance with the applicable legislation. The process of identification, analysis
and validation is described in Internal Regulations. Certain assessments and approvals are mandatory
prior to the conclusion of transactions (loan granting, placement or subscription of securities, real
estate operations, acquisition or disposal of equity holdings or other contractual relationships).
Specifically, proposed transactions with Related Parties must be submitted for analysis and opinion
to the Compliance Department and the Risk Management function, for subsequent submission to
the opinion of the Compliance Committee of the General and Supervisory Board (with subsequent
ratification by the General and Supervisory Board), and for approval by the Executive Board of Directors.
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at www.novobanco.pt > Institutional > Governance > Compliance
During 2020, transactions were carried out with Related Parties (credit transactions, provision of
services and other contracts) under which credit transactions, including extensions and renewals of
limits, with persons and entities that as at 31.12.2021 were Related Parties of novobanco, reached a
total amount of €1,709 million.
Article 85 of the General Law on Credit Institutions and Financial Companies stipulates that credit
institutions may not grant credit, in any form or type, including the provision of guarantees, to members
of their management or supervisory bodies and their relatives, or to companies or other collective
bodies directly or indirectly controlled by them. However, the granting of credit to companies and
other collective bodies not included in paragraph 1, of which they are managers or in which they have a
qualifying holding is allowed under paragraph 8 of the same article 85. In this context, the Compliance
Department issued favourable opinions on 18 credit transactions allowed under said paragraph 8 of
Article 85, which subsequently received a favourable opinion and the approval of the Compliance
Committee of the General and Supervisory Board, the approval of the Executive Board of Directors and
the ratification of the General and Supervisory Board.
In addition, under Article 109 of the General Law on Credit Institutions and Financial Companies, credit
granting to qualifying shareholders, or entities directly or indirectly controlled or in a group relationship
with them is allowed, subject to certain limits. During 2021 novobanco did not conclude any credit
transactions with qualifying shareholders, under said legal rule.
> WHISTLEBLOWING POLICY
novobanco remains strongly committed to the growing internalisation of a culture of compliance,
namely entailing the reporting of undue or irregular behaviours or behaviours that go against the law,
the regulations, good practices, and the bank’s internal policies.
The Whistleblowing Policy regulates, through specific, independent and autonomous means, the
reporting of irregularities by the bank’s employees, as well as by service providers or any third parties,
and its objectives are to preserve the bank’s reputation, effectively protect its assets and those of its
clients, and prevent or detect in advance any irregularities that may be committed.
The communication of irregularities - which may be anonymous but in any case guarantees at all times
that the author is maintained confidential, providing he/she acts in good faith -, is made in writing and
submitted through any of the following channels, at the choice of the author:
• Addressed to the Compliance Committee of the General and Supervisory Board: Avenida da
Liberdade, 195, 14º, 1250-142 Lisbon, Portugal; or
• Through the form available at www.novobanco.pt; or via the intranet if the participant is an employee
of novobanco; or
• By e-mail to the address: irregularidades@novobanco.pt
In 2021, five reports of irregularities were received which, following enquiries, proved to be unjustified.
The General and Supervisory Board is responsible for managing the irregularities communication
system, ensuring the confidentiality of communications.
The Whistleblowing Policy is available at novobanco’s website, in Portuguese and English, at www.
novobanco.pt > Institutional > Governance > Compliance
> ANTI-BRIBERY AND ANTI-CORRUPTION POLICY
Corruption and bribery represent one of the key challenges in modern society and fighting them requires
a joint effort by all sectors of society, including banking, which plays an important role in promoting a
culture of public integrity. The fight against practices of corruption and bribery becomes everyone’s
responsibility, requiring the development of a new set of preventive duties and methodologies across
organisations and public and private entities. The Anti-Bribery and Anti-Corruption Policy approved
by the Compliance Committee of the General and Supervisory Board, and by the Executive Board
of Directors aims to prevent and mitigate the risk of corruption and bribery, and related practices,
reaffirming novobanco’s commitment to building up integrity in society.
The Anti-Bribery and Anti-Corruption Policy is available at novobanco’s website, in Portuguese and
English, at www.novobanco.pt > Institutional > Governance > Compliance
> POLICIES ON THE PREVENTION OF MONEY LAUNDERING AND TERRORIST FINANCING
A bank’s ability to detect and prevent activities capable of constituting money laundering is directly
linked to its knowledge of certain key elements relating to its counterparties and their transactions.
The novobanco Group, through its Compliance Department, sets up the conditions that enable the
bank to detect and prevent, through adequate policies and procedures, the possibility of the bank
and the group being used as vehicles for money laundering or terrorist financing activities, such risks
materialising to a significant extent within the financial system.
Aware of the challenge that this control and preventive action represents, the novobanco Group
maintains the ongoing reassessment of the risks it incurs, by virtue of its business, operations and the
geographies where it operates, endeavouring to identify weaknesses and areas of greater exposure,
in order to ensure it has in place adequate methods of control and mitigation of money laundering or
terrorist financing risks. The ability to prevent and, if possible, detect activities capable of constituting
such crimes is directly linked to the bank’s knowledge about its clients, their counterparties and the
transactions they engage in, particularly at the following moments:
• Opening of contract or change of a party in an existing contract, through what is known as KYC
(Know Your Customer) - i.e., the identification of contract parties, representatives and beneficial
owners must be effectively established;
• Monitoring contracts’ transactions - KYT (Know Your Transactions), spotting unusual situations,
either beforehand or by contacting the client after the situation was detected.
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source of funds circuits, under the terms of the Law.
changes in the rules for marketing financial instruments, novobanco has adopted the best practices
in terms of the governance of products and services, ensuring the prior assessment and subsequent
monitoring of its offer, with the Compliance Department having extended responsibilities in this area.
To that end, novobanco Group, using software tools with internationally recognised results to
complement the experience of its human capital, has created and developed assessment models that
will ensure that greater scrutiny is applied where this proves more necessary.
In compliance with the legal framework, novobanco has approved its standards and policies, and
discloses them in a dedicated area of its website, at www.novobanco.pt > Produtos > Poupança e
Investimento > Informação ao Investidor.
novobanco Group, complying with its regulatory obligations, develops training exercises in preventing
money laundering and terrorist financing for all its employees (commercial and central structures,
including senior management). Training can be remote or face-to-face, the latter mainly directed to
new employees, and the objective is to equip them with skills that enable them to collaborate with the
control functions in mitigating the risks inherent to the execution of their functions.
In 2021, novobanco maintained the training on money laundering and terrorism financing prevention,
having provided 14 150 hours of online training (including 1 542 hours for senior management) and 88
hours of face-to-face training (of which 20 hours for senior management), making a total of 14 238
hours.
Training is seen as a key tool for a correct flagging by the employees of potential situations of money
laundering and terrorist financing. On the other hand, it is also crucial for the purpose of the adequate
fulfilment of the legal and regulatory duties to which the bank is subject.
The prevention of money laundering and terrorist financing is one of the foundations of confidence
in the financial system and as such will continue to deserve permanent operational and strategic
attention by the novobanco Group.
In 2021 the novobanco Group examined 5 851 new contracts, of which 75 were rejected. In addition, 2
391 other contracts were analysed, upon which their ownership was changed. It also analysed 13 161
transactions under existing contracts, of which 663 were reported to the competent authorities.
The bank’s Policies on the Management of the Risk of money laundering and terrorist financing are
available at novobanco’s website, in Portuguese and English, at www.novobanco.pt > Institutional >
Governance > Compliance
> POLICIES ON INVESTOR PROTECTION AND MARKET TRANSPARENCY
The Markets in Financial Instruments Directive, no. 2014/65/EU, of 15 May 2014 (“MiFID II), and related
regulations, which entered into force in January 2018, aim to reinforce investor protection and increase
the transparency and quality of the financial market operation and services provided, and cover all
persons and entities operating in the markets in financial instruments. In addition, the national legislation
on financial intermediation activities (in particular the Securities Code) and life insurance mediation (in
particular Law 7/2019 of 16 January) constitutes the basic framework for fair and transparent action by
financial market operators and, as such, for the novobanco Group.
To address the international trend towards a tightening of the duties of financial intermediaries - of
transparency, legality, completeness of information, diligence and protection of investors -, as well as
The most salient aspects of these standards and policies are summarised below:
Recording and register of communications. novobanco is obliged to keep recordings and registers of
all communications with Customers and potential Customers, with regard to all services, activities and
operations carried out.
Customer classification. novobanco classifies its customers for the purpose of transactions in financial
instruments into one of three categories: non-professional, professional and eligible counterparty.
These classifications have implications on the level of protection allocated to the investor. The lower
the knowledge and experience of the customer about markets and financial instruments the greater
the level of protection.
Assessment of adequacy. In order to ensure that the financial instruments or investment services it
provides suit its Customers’ investment profile, novobanco asks its Customers and potential Customers
to complete investor profile questionnaires, in order to obtain a more comprehensive and detailed image
of, inter alia, their experience and knowledge of investment, their financial situation, their investment
objectives (including capacity to withstand losses) and their risk tolerance. This sharing of information
and knowledge permits to assess whether a given investment product or service is adequate to the
specific situation of the investing client.
Safeguard of Customer Assets. The Securities Code sets forth that in all acts performed, as well
as in accounting and transactions records, the financial intermediary should adopt procedures and
implement measures permitting to maintain a clear distinction between its assets and the assets
of each of its clients to ensure that the opening of proceedings for the insolvency, recovery of the
company or reorganisation of the financial intermediary does not have effects on actions carried out
by the financial intermediary on behalf of its clients. The financial intermediary may not utilise, for its
own or a third party’s benefit, the clients’ financial instruments or exercise the rights inherent thereto,
unless the holders have agreed thereto. novobanco has in place procedures that ensure compliance
with these rules.
Offer screening process. novobanco has established procedures that govern the design, approval,
distribution and monitoring of the products and services offered. These procedures provide for the
screening of new products and services offers, and the monitoring of the existing offer.
> REMUNERATION POLICIES FOR THE MANAGEMENT AND SUPERVISORY BODIES AND
STAFF MEMBERS
Under the terms and for the purposes of Regime Geral das Instituições de Crédito e Sociedades
Financeiras (“RGICSF”), and Bank of Portugal Notice no. 3/2020, and for compliance with the disclosure
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undertaken the annual review and assessment of these remuneration policies to be presented to,
discussed and reviewed by the General and Supervisory Board and the Executive Board of Directors. A
report prepared by the Remuneration Committee regarding the annual review and assessment
of the remuneration policy for the Management and Supervisory Bodies is to be submitted for approval
at the General Shareholders’ Meeting of novobanco.
Prior to the closing of the 2021 accounts, an assessment and review has been made by several
novobanco departments (Human Capital, Legal, Compliance and Risk) with respect to the remuneration
policies for the Management and
Supervisory Bodies and for Staff of novobanco and the group entities, to ensure full alignment of
procedures and practices. The amendments made mainly concerned the following:
i. Update in line with current regulatory framework:
a. EBA Guidelines on sound remuneration policies;
b. Commission Delegated Regulation (EU) 2021/923;
c. Regulation (EU) 2019/2088 of 27 November 2019 on sustainability-related disclosures in the
financial services sector (SRD);
d. Other applicable legislation.
ii. A more detailed description of the specific skills of each unit of the structure involved in the
remuneration decision process and increased centralisation of the implementation of remuneration
policies at group level, giving greater responsibility to the novobanco Remuneration Committee and
the centralised structures of novobanco;
iii. Introduction of the possibility of setting up a talent retention programme for key employees.
These Policies have been prepared in accordance with the legislation in force on that date, and
in particular with the RGICSF, Notice no. 3/2020, the EBA Guidelines 2021/04 relating to sound
remuneration policies, and related legislation and reflect the objectives, strategy, structure and culture
of the Bank, steered by principles of meritocracy and transparency.
The Remuneration Committee considers that the Remuneration Policies are adequate to the current
situation of novobanco and that the incentives defined for the members of the Executive Board of
Directors and for the different categories of employees, as well as the structure of those incentives, are
aligned to the long-term objectives of the institution and of the various stakeholders.
The Governance of the Remuneration Policy provides for the involvement of several internal structures,
namely the Remuneration Committee, the Risk Committee of the GSB, and also several Departments
of the bank, including the Risk, Compliance, Audit, Legal, and Human Capital Departments, ensuring
full alignment of the established practices with the applicable regulatory requirements and the higher
interests of the institution.
i) Limits to remuneration in novobanco
Following the sale process of novobanco, and in the context of the State aid granted, the Portuguese
State assumed certain commitments before the European Commission (State Aid no.SA.49275 (2017
/ N)) up to the end of the Restructuring Period, whose termination is currently being reviewed by the
European Commission and is pending confirmation (hereinafter the “Restructuring Period”).
This situation entails the following limitations to the Remuneration of the Management and Supervisory
Bodies and the Employees of novobanco:
• Up to 30 June 2020 the Bank could not pay any employee or Member of a Management or Supervisory
Body a total annual salary (includes salary, pension contribution, premium/bonus) above 10 times
the average annual salary of the employees of novobanco. In the period comprised between 30
June 2020 and the end of the Restructuring Period, this limit could be exceeded providing all the
established viability commitments had been met. In any case, the Bank may attribute deferred
bonuses for performance during the Restructuring Period, making the respective payment only at
the end of this period.
• Up to the end of the Restructuring Period, the total remuneration and respective conditions of
payment/attribution may be affected by non-compliance with the commitments referred to above.
The Remuneration Policies are thus subject to changes resulting from the said commitments.
ii) Description of the Remuneration Policy of the Management and Supervisory Bodies
Policy Approval Powers. The approval of the Remuneration Policy of the Management and Supervisory
Bodies is the responsibility of the General Meeting, upon proposal of the Remuneration Committee of
the General and Supervisory Board, and this Committee is also responsible for, among others:
• Decide on the remuneration to be attributed to the members of the Executive Board of Directors,
as well as their KPIs, and define and approve the budget for the total variable remuneration of
employees, based, among other factors, on the operating results in the period;
• Verify if the existing remuneration policies are updated and if necessary propose the appropriate
changes;
• Review the mechanisms and systems used to ensure that remuneration systems are consistent
with sound and effective risk management and assess the criteria used to define remuneration and
ex ante risk adjustment based on actual risk outcomes (Clawback or Malus);
General and Supervisory Board. Only the independent members of the General and Supervisory Board
shall receive remuneration from novobanco, such remuneration being fixed only and paid 12 times
per year. If applicable, the members of the General and Supervisory Board shall also be subject to the
limitations referred to in 1) above.
Executive Board of Directors. The remuneration of the Executive Board of Directors consists of a
fixed component and a variable component. The fixed remuneration is established according to the
complexity, level of responsibility and skills required for the function, and is paid 14 times per year. The
variable component of the remuneration is awarded on a discretionary basis, according to individual
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These criteria are set by the Remuneration Committee and informed in due time to the members of the
Executive Board of Directors.
of the Remuneration Committee. When a Variable Remuneration exists, it is calculated based on
individual and collective performance, taking into account the following principles:
• Performance must be assessed according to quantitative and qualitative criteria and through
The following criteria are also considered in the process of attribution of variable remuneration
financial and non-financial variables;
•
•
•
It may only be attributed if it does not jeopardise the Bank’s ability to maintain a solid own funds
base, if the Bank has achieved a positive operational performance, and if its attribution is consistent
with sound and effective risk management practices;
It is subject to a maximum cap of 100% of the annual fixed remuneration, or as otherwise approved
by the General Meeting;
It is phased over a multi-year framework, being fully deferred proportionally over a minimum period
of three years. However, during the Restructuring Period, the amounts attributed relative to 2019
2020 are 100% deferred and will only become a vested right and, consequently, will only be paid, at
the end of that period, under the terms defined in the respective Policy.
• 50% of the amounts attributed shall take the form of “Remuneration Units”, whose terms and
conditions regarding the award, vesting and payment are defined in the Remuneration Units
Regulation. The value of each “Remuneration Unit” is determined by the Remuneration Committee,
according to financial indicators of the Bank, prior to settlement of any deferred amount.
Besides any commitment agreed in the hiring process under the form of a sign-on bonus or possible
compensation for retention, no other Variable Remuneration shall be guaranteed in any way.
All amounts paid or deferred, regardless of whether they constitute vested rights, are subject to
risk-based adjustments, Clawback and/or Malus, including those that are deferred as a result of the
application of the limits established in point i) (Limitations on remuneration at novobanco).
In what concerns other benefits, such as Health Insurance or Mobile Phone, the internal policies defined
for the purpose shall apply.
Identified Staff
Policy Approval Powers. The approval of the Remuneration Policy for Employees is the responsibility
of the Executive Board of Directors, upon a proposal of the Remuneration Committee.
Selection of employees. The Bank’s Employee Remuneration Policy includes specific chapters
applicable to employees who have or may have a significant impact on novobanco’s risk profile -
classified as Identified Staff, as set forth in the Policy.
The list of Identified Staff is shared every year with the Bank of Portugal, under Bank of Portugal
instruction no.18/2020.
Components of Remuneration. The Fixed Remuneration shall reflect the skills, experience and
responsibility inherent to the function performed, and shall not depend on performance. The attribution
of Variable Remuneration to the Identified Staff, as well as its annual amount, depends on the decision
• The period of assessment of performance and attribution of variable remuneration must be multi-
annual - which implies that a substantial part of the amount attributed be deferred so as to take
into account economic cycles and the management of risk -, and promote the retention of Identified
Staff;
• The existence of risk adjustment mechanisms (Malus and Clawback), as described in the
Remuneration Policy;
• The amount attributed is limited to 100% of the annual Fixed Remuneration or as otherwise approved
by the General Meeting;
• 50% of the amounts attributed shall take the form of “Remuneration Units”, whose terms and
conditions regarding the award, vesting and payment are defined in the Remuneration Units
Regulation. The value of each “Remuneration Unit” is determined by the Remuneration Committee,
according to financial indicators of the Bank, prior to settlement of any deferred amount.
• Variable remuneration can only be guaranteed in the first year after hiring and then in the form of a
sign-on bonus.
• The remuneration limits defined in point i) above also apply to these employees.
iii) Disclosure of Remuneration
Refer to point 5.6 Remuneration of the members of the Corporate Bodies and Identified Staff.
> POLICY FOR SELECTION AND ASSESSMENT OF THE MANAGEMENT AND SUPERVISORY
BODIES AND KEY FUNCTION HOLDERS
novobanco has in place a Policy for Selection and Assessment of the Management and Supervisory
Bodies and Key Function Holders (the “Policy”), thus ensuring compliance with the regulations in force
and the implementation of the required governance standards for Significant Financial Institutions. The
Policy was approved by the Nomination Committee, the Executive Board of Directors, the General and
Supervisory Board, and the General Meeting.
The Policy aims to ensure that the members of the Management and Supervisory Bodies and Key
Function Holders (essentially the holders of the Risk, Audit, and Compliance Functions, branch general
managers and other managers identified by the Bank as having risk-taking functions, currently the
heads of Treasury and Marketing) meet all the fit and proper criteria to perform their functions, both at
the time of appointment and throughout their mandates. This suitability to the function basically refers
to the capacity to permanently ensure a sound and prudent management of the institution, which is
assessed in accordance with the following requirements: i) Experience; ii) Repute; Independence; iv)
Availability; and v) Collective Suitability.
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as key function holders, and also the integration of a gender diversity objective.
> POLICY FOR THE SELECTION AND EVALUATION OF NOVO BANCO’ STATUTORY
AUDITOR AND THE CONTRACTING OF NON-PROHIBITED NON-AUDIT SERVICES.
O novobanco aprovou em 2018 reviu em 2021, a Política de Seleção e Avaliação do Revisor Oficial
novobanco revised in 2021 its Policy for the Selection and Evaluation of novobanco’ Statutory
Auditor and for the contracting of non-prohibited non-audit services, in compliance of the applicable
regulations. This Policy was approved by the Financial Affairs (Audit) Committee of the General and
Supervisory Board, by the General and Supervisory Board and by novobanco’s General Shareholders’
Meeting.
This Policy applies to the selection, designation and assessment of the Statutory Auditor and aims to
ensure that the Statutory Auditor fulfils the necessary requirements of suitability (“fit and proper”),
professional experience, independence and availability, taking into account the nature, dimension
and complexity of novobanco’ activity and the responsibilities inherent to the specific tasks to be
performed.
To achieve its purpose, the Policy defines the evaluation criteria, stipulates an obligation to monitor the
Statutory Auditor’s activity and establishes the internal responsibilities and the procedures that must
be followed.
In addition, the Policy defines the criteria and procedures to apply in case non-audit services are
contracted with the Statutory Auditor and defines the ones which are allowed and the ones which are
prohibited.
Name
Position
Amount (in euros)
Members of the Corporate Bodies in office at the date of this Report
Executive Board of Directors
Luís Miguel Alves Ribeiro
Member of the Executive Board of Directors
€184 201.46
Closely related persons
General and Supervisory Board
Carla Alexandra Severino Antunes da Silva
Member of the General and Supervisory Board
Closely related persons
Entity where a member of the Executive Board of Directors holds a management position
LOCARENT - Companhia Portuguesa Aluguer Viaturas S.A.
novobanco dos AÇORES
SIBS - SGPS SA
UNICRE - Instituição Financeira de Crédito SA
€132 464.25
€373 913.02
€121 947 176.56
€6 294 560.00
€11 955 335.73
€38 050 000.00
The amounts shown in the tables above concern Residential Mortgage Loans, except for those related
to entities where a member of the Executive Board of Directors holds a management position, and to
the person related to the member of the General and Supervisory Board, where they concern corporate
loans and guarantees. These amounts also include the subscription of senior debt securities (non-
preferential) issued by novobanco dos Açores.
For the disclosure purposes of Art. 109 (7) of the RGICSF, in 2021 there were no outstanding loans to
direct or indirect holders of qualified holdings. For the purposes of the same article, outstanding loans
to persons related therewith were as follows:
5.5 CREDIT TO MEMBERS OF THE
CORPORATE BODIES
Name
Type of Credit
Amounts (in euros)
Entities controlled directly or indirectly by a person holding directly or indirectly a stake in the credit institution
Esmalglass Portugal Productos Cerâmicos, S.A.
Garantia Bancária
1 500.00 €
At 31 December 2021 the outstanding amount of loans to persons and entities falling under the
provisions of art. 85 of the General Law on Credit Institutions and Financial Companies (Regime Geral
das Instituições de Crédito e Sociedades Financeiras - RGICSF is presented below:
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES
5.6 REMUNERATION OF THE
MEMBERS OF THE CORPORATE
BODIES AND IDENTIFIED STAFF
According to several regulatory obligations, among others, Bank of Portugal Notice 3/2020 and
Regulation (EU) No 575/2013 of the European Parliament and of the Council, novobanco shall disclose
the Remuneration of Members of Corporate Bodies and Identified Staff.
i) Executive Board of Directors
Executive Board of Directors
António Manuel Palma Ramalho
Rui Miguel Dias Ribeiro Fontes
Luis Miguel Alves Ribeiro
Luisa Marta Santos Soares da Silva Amaro de Matos
Mark Georges Bourke *
Andres Baltar Garcia
General and Supervisory Board
Byron James Macbean Haynes
Karl - Gerhard Eick
Benjamin Friedrich Dickgiesser
Kambiz Nourbakhsh
Donald John Quintin
John Ryan Herbert
Robert Alan Sherman
Mark Andrew Coker
Carla Alexandra Severino Antunes da Silva
Willian Henry Newton**
Total 2021
Fixed Remuneration
Role
Total Paid and Deferred
CEO
Member
Member
Member
Member
Member
Chairman
Vice-Chairman
Member
Member
Member
Member
Member
Member
Member
Member
2 039 865
410 000
298 683
298 683
297 500
385 000
350 000
1 100 000
425 000
300 000
0
0
0
95 000
95 000
0
75 000
110 000
Paid
1 988 581
371 858
298 683
298 683
297 500
371 858
350 000
1 046 858
371 858
300 000
0
0
0
95 000
95 000
0
75 000
110 000
Salary
Other post-EBD benefits
1 986 216
371 858
297 500
297 500
297 500
371 858
350 000
1 046 858
371 858
300 000
0
0
0
95 000
95 000
0
75 000
110 000
2 365
0
1 183
1 183
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(*) In addition, a rental allowance of €51,000 was paid during the year. After consultation with the Monitoring Trustee, who has liaised with DGCOMP, they confirmed a rent allowance of a reasonable amount would not be considered as a component of the “total annual remuneration” under Remuneration Limits imposed by DGCOMP.
(**) GSB member since May 1,st 2021. In the period from January to April, he received €55,000 under a consultancy agreement.
Deferred
51 284
38 142
0
0
0
13 142
0
53 142
53 142
0
0
0
0
0
0
0
0
0
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES In 2021, there were no amounts paid to the members of the Corporate Bodies of novobanco by other
group companies.
For Year 2021 regarding Variable Remuneration, there was a conditional award, subject to the
verification of several conditions, of 1.600 thousand euros to the members of the Executive Board of
Directors. This award was based on individual and collective performance of each member, which was
assessed by the Remuneration Committee. This attribution did not create vested rights, no payment to
the members was made and is subject to verification of condition defined in the Remuneration Policy.
According to the Remuneration Policy, Variable Remuneration award is subject to the maximum limit
of 100% of the annual Fixed Remuneration of each member, 50% of which is attributed in the form of
cash and 50% in the form of Remuneration Units. The value of the Remuneration Units at the date of
the attribution is 1 (one) Euro and their value is then reassessed, by the Remuneration Committee, at
the time of payment. According to the “Regulation of Remuneration Units”, at the time of payment,
the value of the Remuneration Units can only be adjusted downwards when compared to that defined
at the time of award.
Additionally, this award was fully deferred and there shall be no payments until after the end of the
Restructuring Period. This Variable Remuneration does not constitute an acquired right until after the
end of the Restructuring Period and will be subject to the risk adjustment mechanisms provided for in
the Remuneration Policy, namely, Malus and/or Claw back.
The 2021 Variable Remuneration attributed to the members of the Executive Board of Directors is
subject to future adjustments. In particular, there is no vested right or certainty as to what the final
Variable Remuneration amount will be attributed or when payments will be made.
> Other benefits and compensation and non-cash benefits
Nothing to report.
> Compensation paid or due to former members of the Executive Board of Directors in
relation to early contract termination in the reporting year
Nothing to report.
> Plans for the attribution of shares or stock options
Nothing to report.
ii) Identified Staff
Following its annual self-assessment procedure as stated in the Remuneration Policy, the Identified
Staff was updated by the Executive Board of Directors and reviewed and approved by the Remuneration
Committee. A group of 47 employees was classified as Identified Staff and the table below show their
Fixed and Variable Award Remuneration for 2021.
Identified Staff
Commercial
Control Functions
Suport
Total 2021 (**)
Fixed Remuneration
# Employees
Total Paid and awarded
47
8
5
34
9 205 431
1 983 268
932 809
6 289 354
Paid
6 255 431
1 218 751
612 602
4 424 078
Salary
Other post-employment benefits
6 224 442
1 211 809
611 494
4 401 139
30 989
6 942
1 108
22 939
“Variable Remuneration
awarded
2021 (*)
2 950 000
764 517
320 207
1 865 276
(*) The 2021 award will be deferred and paid out in subsequent years in accordance with Remuneration Policy. Includes sign-on bonus of 170.000€ paid to two new signings.
(**) In 2021 1/3 of the Identified Staff Bonus award of 2018 and 1/3 of Bonus award 2019 and 1/3 of the award of 2020 have been paid (1.604.467€).
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BY MEMBERS OF THE
MANAGEMENT AND
SUPERVISORY BODIES
As at 31 December 2021, and with regard to fiscal year of 2021, the members of the management and
supervisory bodies of novobanco did not hold any securities issued by novobanco or by companies in a
control or group relationship with novobanco.
Additionally, no acquisitions, disposals or transmissions of securities issued by novobanco or by
companies in a control or group relationship with novobanco were carried out in this period by the
members of the management and supervisory bodies of novobanco.
5.8 NON-MATERIAL INDIRECT
INVESTMENT IN NOVO BANCO
All current members of the Executive Board of Directors and certain members of the General and
Supervisory Board acquired, using their own resources, holdings in an indirect investment structure in
novobanco, which had been set up (and is controlled) by LSF Nani GP, LLP, which owns indirectly a 75%
interest in novobanco. This indirect investment represents a shareholding of substantially less than 1%
in novobanco and has no financial impact on the Bank, or in the exercise of the functions, suitability and
independence of the aforesaid members, taking into account the reduced weight of the investment
on the share capital’s percentage, and also for each individual. Non-material indirect investments in
novobanco have been disclosed in previous novobanco’s annual financial statements and were notified
to the relevant supervisory authorities and internal control bodies. In addition, certain staff members
also had the opportunity to make a non-material indirect investment in novobanco using their own
resources, under the same terms as the above.
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CONSOLIDATED
FINANCIAL
STATEMENTS AND
FINAL NOTES
6.1 Consolidated Financial Statements
6.2 Separate Financial Statements
6.3 Final Notes
6.4 Note of Recognition
Sandra Catarino
Risk Department - Area Manager
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CONSOLIDATED INCOME STATEMENT AS AT 31 DECEMBER 2021 AND 2020
Interest Income
Interest Expenses
Net Interest Income
Dividend income
Fees and commissions income
Fees and commissions expenses
Gains or losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
Gains or losses on financial assets and liabilities held for trading
Gains or losses on financial assets mandatorily at fair value through profit or loss
Gains or losses on financial assets and liabilities designated at fair value through profit and loss
Gains or losses from hedge accounting
Exchange differences
Gains or losses on derecognition of non-financial assets
Other operating income
Other operating expenses
Operating Income
Administrative expenses
Staff expenses
Other administrative expenses
Cash contributions to resolution funds and deposit guarantee schemes
Depreciation
Provisions or reversal of provisions
Commitments and guarantees given
Other provisions
Impairment or reversal of impairment on financial assets not measured at fair value through profit or loss
Impairment or reversal of impairment of investment in subsidiaries, joint ventures and associates
Impairment or reversal of impairment on non-financial assets
Share of the profit or loss of investments in subsidiaries, joint ventures and associates accounted for using the equity method
Profit or loss before tax from continuing operations
Tax expense or income related to profit or loss from continuing operations
Current tax
Deferred tax
Profit or loss after tax from continuing operations
Profit or loss from discontinued operations
Profit or loss for the period
Attributable to Shareholders of the parent
Attributable to non-controlling interests
The Certificated Accountant
Executive Board of Directors
thousands of euros
31.12.2021
31.12.2020
740 459
(167 065)
573 394
11 096
325 511
(47 357)
(5 123)
50 896
46 697
21
14 195
10 805
7 551
163 875
(181 604)
969 957
(374 359)
(233 261)
(141 098)
(40 535)
(34 004)
(127 835)
9 840
(137 675)
(198 903)
315
(26 314)
3 794
172 116
15 186
(12 737)
27 923
187 302
4 887
192 189
184 504
7 685
192 189
743 707
(188 573)
555 134
16 478
313 823
(47 305)
88 472
(91 611)
(364 000)
-
(11 641)
(2 414)
(3 416)
120 732
(230 294)
343 958
(398 769)
(245 606)
(153 163)
(35 048)
(33 072)
(186 423)
(22 116)
(164 307)
(755 070)
(4 192)
(245 778)
9 430
(1 304 964)
(1 082)
8 639
(9 721)
(1 306 046)
(33 345)
(1 339 391)
(1 329 317)
(10 074)
(1 339 391)
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ASSETS
Cash, cash balances at central banks and other demand deposits
Financial assets held for trading
Financial assets mandatorily at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Financial assets at amortised cost
Securities
Loans and advances to banks
Loans and advances to customers
Derivatives — Hedge accounting
Fair value changes of the hedged items in portfolio hedge of interest rate risk
Investments in subsidiaries, joint ventures and associates
Tangible assets
Tangible fixed assets
Investment properties
Intangible assets
Tax assets
Current Tax Assets
Deferred Tax Assets
Other assets
Non-current assets and disposal groups classified as held for sale
TOTAL ASSETS
LIABILITIES
Financial liabilities held for trading
Financial liabilities measured at amortised cost
Deposits from central banks and other banks
(of which: Operations with repurchase agreement)
Due to customers
Debt securities issued, Subordinated debt and liabilities associated to transferred assets
Other financial liabilities
Derivatives — Hedge accounting
Provisions
Tax liabilities
Current Tax liabilities
Deferred Tax liabilities
Other liabilities
Liabilities included in disposal groups classified as held for sale
TOTAL LIABILITIES
EQUITY
Capital
Accumulated other comprehensive income
Retained earnings
Other reserves
Profit or loss attributable to Shareholders of the parent
Minority interests (Non-controlling interests)
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
The Certificated Accountant
Executive Board of Directors
thousands of euros
31.12.2021
31.12.2020
5 871 538
377 664
799 592
7 220 996
26 039 902
2 338 697
50 466
23 650 739
19 639
30 661
94 590
864 132
238 945
625 187
67 986
779 892
35 653
744 239
2 442 550
9 373
44 618 515
306 054
-
40 215 994
10 745 155
27 582 093
1 514 153
374 593
44 460
442 834
15 297
12 262
3 035
443 437
968
41 469 044
6 054 907
(1 045 489)
(8 576 860)
6 501 374
184 504
31 035
3 149 471
44 618 515
2 695 459
655 273
960 962
7 907 587
25 898 046
2 229 947
113 795
23 554 304
12 972
63 859
93 630
779 657
187 052
592 605
48 833
775 498
610
774 888
2 944 292
1 559 518
44 395 586
554 791
-
37 808 767
10 102 896
26 322 060
1 017 928
365 883
72 543
384 382
14 324
9 203
5 121
417 762
1 996 382
41 248 951
5 900 000
(823 420)
(7 202 828)
6 570 154
(1 329 317)
32 046
3 146 635
44 395 586
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INCOME STATEMENT AS AT 31 DECEMBER 2021 AND 2020
Interest Income
Interest Expenses
Net Interest Income
Dividend income
Fees and commissions income
Fees and commissions expenses
Gains or losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
Gains or losses on financial assets and liabilities held for trading
Gains or losses on financial assets mandatorily at fair value through profit or loss
Gains or losses on financial assets and liabilities designated at fair value through profit and loss
Gains or losses from hedge accounting Exchange differences
Gains or losses on derecognition of non-financial assets
Other operating income
Other operating expenses
Outras despesas operacionais
Operating Income
Administrative expenses
Staff expenses
Other administrative expenses
Cash contributions to resolution funds and deposit guarantee schemes
Depreciation
Provisions or reversal of provisions
Commitments and guarantees given
Other provisions
Impairment or reversal of impairment on financial assets not measured at fair value through profit or loss
Impairment or reversal of impairment of investment in subsidiaries, joint ventures and associates
Impairment or reversal of impairment on non-financial assets
Profit or loss before tax from continuing operations
Tax expense or income related to profit or loss from continuing operations
Current tax
Deferred tax
Profit or loss after tax from continuing operations
Profit or loss from discontinued operations
Attributable to Shareholders of the parent
The Certificated Accountant
Executive Board of Directors
thousands of euros
31.12.2021
31.12.2020
748 592
(167 508)
581 084
18 400
287 013
(40 296)
(7 234)
51 222
42 734
-
14 896
10 653
(4 582)
79 753
(141 545)
892 098
(346 975)
(214 994)
(131 981)
(40 172)
(33 799)
(111 770)
9 900
(121 670)
(196 230)
49 691
(12 069)
200 774
24 043
(4 249)
28 292
224 817
1 091
225 908
760 111
(192 112)
567 999
16 928
279 878
(41 438)
86 183
(91 208)
(521 059)
-
(12 053)
(2 000)
2 272
87 599
(89 879)
283 222
(367 635)
(223 604)
(144 031)
(34 766)
(35 033)
(187 839)
(21 595)
(166 244)
(750 975)
(41 285)
(215 397)
(1 349 708)
4 216
13 400
(9 184)
(1 345 492)
(28 754)
(1 374 246)
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES BALANCE SHEET AS AT 31 DECEMBER 2021 AND 2020
ASSETS
Cash, cash balances at central banks and other demand deposits
Financial assets held for trading
Financial assets mandatorily at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Financial assets at amortised cost
Securities
Loans and advances to banks
Loans and advances to customers
Derivatives — Hedge accounting
Fair value changes of the hedged items in portfolio hedge of interest rate risk
Investments in subsidiaries, joint ventures and associates
Tangible assets
Tangible fixed assets
Intangible assets
Tax assets
Current Tax Assets
Deferred Tax Assets
Other assets
Non-current assets and disposal groups classified as held for sale
TOTAL ASSETS
LIABILITIES
Financial liabilities held for trading
Financial liabilities measured at amortised cost
Deposits from central banks and other banks
(dos quais: Operações com acordo de recompra)
Due to customers
Debt securities issued, Subordinated debt and liabilities associated to transferred assets
Other financial liabilities
Derivatives — Hedge accounting
Provisions
Tax liabilities
Current Tax liabilities
Other liabilities
Liabilities included in disposal groups classified as held for sale
TOTAL DO PASSIVO
EQUITY
Capital
Accumulated other comprehensive income
Retained earnings
Other reserves
Profit or loss attributable to Shareholders of the parent
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
The Certificated Accountant
Executive Board of Directors
thousands of euros
31.12.2021
31.12.2020
5 674 461
377 709
2 250 308
7 133 508
24 977 300
2 893 829
186 089
21 897 382
20 150
28 787
241 066
231 419
231 419
67 515
776 769
35 448
741 321
2 555 852
6 601
2 524 868
655 327
2 445 605
7 813 584
24 804 483
2 873 753
245 472
21 685 258
13 606
60 976
189 924
188 968
188 968
48 331
771 854
-
771 854
2 956 010
1 568 912
44 341 445
44 042 448
305 512
40 346 362
11 497 829
1 529 847
26 997 858
1 479 066
371 609
44 460
478 170
4 703
4 703
362 836
-
41 542 043
6 054 907
(968 987)
(8 576 860)
6 064 434
225 908
2 799 402
44 341 445
554 343
37 895 984
10 778 468
1 625 724
25 778 507
974 996
364 013
72 543
438 572
5 536
5 536
314 611
2 007 770
41 289 359
5 900 000
(749 259)
(7 202 828)
6 179 422
(1 374 246)
2 753 089
44 042 448
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6.4 NOTE OF RECOGNITION
6.3.1 Declaration of Conformity with the Financial
Information Reported
In accordance with Article 246-1-c) of the Portuguese Securities Code (“Código dos Valores Mobiliários”),
the members of the Executive Board of Directors of Novo Banco, S.A., named below, state that:
i. the separate and consolidated financial statements of novobanco, for the year ended on 31
December 2021 were prepared in accordance with the International Financial Reporting Standards
(IFRS) as adopted in the European Union;
ii. to the best of their knowledge the financial statements referred to in (i) provide a true and fair view of
the assets and liabilities, equity and earnings of novobanco and of novobanco Group, in accordance
with the referred standards;
iii. the management report describes accurately the evolution of the businesses, the performance and
the financial position of novobanco and of novobanco Group in 2021 and includes a description of
the main risks and uncertainties faced.
The management report and the individual and consolidated financial statements have been approved
at the meeting of the Executive Board of Directors held on 2 March 2022.
6.3.2 Proposal for the distribution of novobanco
results
Under the terms of Article 66 (5-f) and for the purposes of Article 376 (1-b) of the Portuguese
Companies Code, and pursuant to Article 29 of the bank’s Articles of Association, the Executive
Board of Directors of novobanco proposes, for approval by the General Meeting, that the net profit
reported in the separate accounts for financial year 2021, in the amount of €225 908 388.79
be allocated €22 590 838.87 to the Legal Reserve, pursuant to article 97 of the General Regime for
Credit Institutions and Financial Companies, and €203 317 549.92 to the “Other Reserves and Retained
Earnings” on the Balance Sheet, to cover losses incurred in previous years.
The General and Supervisory Board and the Executive Board of Directors hereby express their
recognition for the loyalty, trust and involvement with the bank of its clients and employees, as well as
for the collaboration of the Governmental, Supervision and Resolution Authorities and the European
Commission.
Lisbon, 8 March 2021
The Executive Board of Directors
António Manuel Palma Ramalho
Luísa M. S. Soares da Silva Amaro de Matos
Mark George Bourke
Luís Miguel Alves Ribeiro
Rui Miguel Dias Ribeiro Fontes
Andrés Baltar
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ALTERNATIVE
PERFORMANCE
MEASURES
Daniela Almeida
North Corporate Department - Business Client Manager
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the disclosure of Alternative Performance Measures (APM) by issuers of securities (ESMA/2015/1415),
of compulsory application from 03 July 2016.
The novobanco Group uses a set of indicators in the analysis of its financial performance that can be
classified as Alternative Performance Measures, in accordance with the referred ESMA guidelines.
In compliance with the ESMA guidelines, we present hereunder (i) the reconciliation of the Consolidated
Income Statement and (ii) the Alternative Performance Measures:
I – Reconciliation of the Income Statement
Reconciliation between the Official Consolidated Income Statement and the Management Consolidated
Income Statement used by novobanco’s management as a work tool in the analysis of the Group’s
performance:
OFFICIAL INCOME STATEMENT
Interest Income
Interest Expenses
Net Interest Income
Dividend income
Fee and comission income
Fee and comission expenses
Gains or losses on derecognition of financial assets and liabilities
not measured at fair value through profit or loss
Gains or losses on financial assets and liabilities held for trading
Gains or losses on financial assets mandatorily at fair value
through profit or loss
Gains or losses on financial assets and liabilities designated at fair
value through profit and loss
Gains or losses from hedge accounting
Exchange differences
Gains or losses on derecognition of non-financial assets
Other operating income
Other operating expenses
Operating Income
Administrative expenses
Staff expenses
Other administrative expenses
Contributions to resolution funds and deposit guarantee schemes
Depreciation
Provisions or reversal of provisions
Commitments and guarantees given
Other provisions
Impairment or reversal of impairment on financial assets not
measured at fair value through profit or loss
Impairment or reversal of impairment of investment in
subsidiaries, joint ventures and associates
Impairment or reversal of impairment on non-financial assets
Share of the profit or loss of investments in subsidiaries, joint
ventures and associates accounted for using the equity method
Profit or loss before tax from continuing operations
Tax expense or income related to profit or loss from continuing operations
Current tax
Deferred tax
Profit or loss after tax from continuing operations
Profit or loss from discontinued operations
Profit or loss for the period
Attributable to Shareholders of the parent
Attributable to non-controlling interests
740 459
(167 065)
573 394
11 096
325 511
(47 357)
(5 123)
50 896
46 697
21
14 195
10 805
7 551
163 875
(181 604)
969 957
(233 261)
(141 098)
(40 535)
(34 004)
9 840
(137 675)
(198 903)
315
(26 314)
3 794
172 116
(12 737)
27 923
187 302
4 887
192 189
184 504
7 685
192 189
Net Interest
Income
Fees and
Commissions
Market Results
Other Operating
Results
Staff Costs
General and
Administrative
Costs
Depreciation
Restructuring
funds -
independent
valuation
Credit
Impairment
Securities
Impaiment
Other
Assets and
Contingencies
Provisions
282 525
75 874
40 397
(233 261)
(141 098)
(34 004)
-
(149 375)
(47 779)
(155 583)
573 394
740 459
( 167 065)
euro thousands
Taxes
15 186
Special Tax on
Banks
( 34 087)
325 511
( 47 357)
11 096
14 246
50 896
46 697
21
14 195
10 805
4 371
2 738
( 74 820)
( 19 369)
7 551
156 766
( 72 697)
(40 535)
3 794
4 887
(233 261)
(141 098)
(34 004)
9 840
( 137 675)
(149 375)
(47 779)
( 1 749)
315
( 26 314)
( 12 737)
27 923
( 34 087)
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES II – Alternative performance measures
Information on the Alternative Performance Measures (definition, calculation method and scope).
ALTERNATIVE PERFORMANCE INDICATORS
Designation
Definition/Utility
Calculation Basis
Conciliation with the Financial Statements
Fees and Commissions
Commercial banking income
Indicator of results of financial activity directly related to services provided
to clients Historical financial performance indicator
Fee and commission income less fee and commission expenses
(DR): Fee and commission income and Fee and commission expenses
Indicator of the results of commercial activity most directly related to
customers Historical financial performance indicator
Financial margin + Customer services
Capital markets results
Indicator of results of activity in the financial markets Historical financial
performance indicator indicator
Results from trading hedging operations, assets at fair value through other
comprehensive income and at amortized cost
(DR): Dividend income, gains or losses on the derecognition of financial
assets and liabilities not measured at fair value through profit or loss, gains
or losses on financial assets and liabilities held for trading, gains or losses
on financial assets that must be accounted for at fair value through profit
or loss, gains or losses on financial assets and liabilities accounted for at
fair value through profit or loss, gains or losses from hedge accounting and
exchange differences
Other operating results
Indicator of other diverse results, not directly related to activity with
customers and markets Historical financial performance
Gains or losses on the derecognition of non-financial assets + Other
operating income + Other operating expenses + Proportion of profits or
losses from investments in subsidiaries and joint ventures and associates
accounted for using the equity method
(DR): Gains or losses on the derecognition of non-financial assets, other
operating income, other operating expenses, proportion of profits or
losses from investments in subsidiaries and joint ventures and associates
accounted for using the equivalence method
Banking Income
Financial activity results indicator Historical financial performance indicator
Net interest income + Fees and commissions + Capital markets results +
Other operating results
Operating costs
Operational result
Indicator of structural costs that support commercial activity and whose
analysis allows to assess the trajectory of progression of costs Indicator of
histoncal financial performance
Indicator of results of financial activity less costs and before impairment.
Measures the extent to which the income generated covers / exceeds
operating costs Historical financial performance indicator
Provisions, net of replacement / Impairments
Indicator of net reinforcements of impairments made in the year Historical
financial performance indicator
Personnel expenses + Other administrative expenses + Depreciation
(DR): Personnel expenses, Other administrative expenses and Depreciation
Banking income - Operating costs
Provisions or reversal of provisions + Impairment or reversal of financial
assets not measured at fair value through profit or loss + Impairment or
reversal of impairment of investments in subsidiaries, joint ventures and
associates + Impairment or reversal of impairment of non-financial assets
(DR): Provisions or reversal of provisions, Impairment or reversal of
impairment of financial assets not measured at fair value through profit or
loss, Impairment or reversal of impairment of investments in subsidiaries,
joint ventures and associates and Impairment or reversal of impairment of
non-assets financial
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES BALANCE SHEET/LIQUIDITY
Designation
Definition/Utility
Calculation Basis
Conciliation with the Financial Statements
Assets eligible for rediscount transactions with
the ECB
Trading financial securities or other types of assets, such as non-
marketable assets or cash, accepted as collateral by the ECB in financing
operations Indicator of historical financial performance
n.a.
n.a.
Securities portfolio
Indicator of the size of funds invested in trading assets, at fair value
through profit or loss, at fair value through profit or loss mandatory, at
fair value through other comprehensive income and at amortized cost
Historical financial performance indicator
Securities (bonds, shares and other variable income securities) recorded
in trading portfolios, at fair value through profit or loss, at fair value
through mandatory income, at fair value through equity and amortized
cost.
(BAL): Securities held for trading and Securities portfolio
Customer deposits
Instruction No 16/2004 of Banco de Portugal
Indicator of the asset’s financing capacity Historical financial
performance indicator
Set of amounts entered in the following general ledges accounting
items: [#400 - #34120 + #52020 + #53100]
(BAL): Customer resources
Net financing from the ECB
Indicator that reflects the net amount that was obtained from the ECB
to finance the activity Historical financial performance indicator
Difference between the amount of financing obtained from the ECB and
investments in the ECB
(BAL): Applications at the ECB and Resources from the ECB
Customer funds
Off-balance funds
Total customer funds
Commercial gap
Liquidity gap
Indicator of the asset’s financing capacity Historical financial
performance indicator
Deposits + Other customer funds + Debt securities placed on customers
(BAL): Customer funds, Debt securities issued, subordinated liabilities
and Liabilities associated with transferred assets
Indicator of off-balance sheet customer funds Historical financial
performance indicator
Off-balance sheet resources managed by Group companies, which
include real estate and investment funds, pension funds, banking
insurance, portfolio management and discretionary management
Indicator of customer resources registered on the balance sheet and off
balance sheet Historical financial performance indicator
Deposits + Other customer resources + Issued bonds + Subordinated
liabilities + Disintermediation resources
(BAL): Customer resources, Liabilities represented by securities,
subordinated liabilities and Liabilities associated with transferred assets
Indicator that measures the need / excess of financing in absolute value
of the commercial area Historical financial performance indicator
Indicator that allows assessing the need / excess liquidity accumulated
up to 1 year, in each cumulative scale of residual maturity. Historical
financial performance indicator
Difference between customer deposits and net credit
(BAL): Net customer loans and customer deposits
Difference between [(Net assets - volatile liabilities)]
Loans to Deposit Ratio
Instruction No 16/2004 of Banco de Portugal
Indicator of the relationship between the financing of the activity
and the funds raised from customers Historical financial performance
indicator
Ratio between [(total credit - accumulated impairment for credit) and
deposits customer]
(BAL): Net customer loans and customer deposits
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES ASSET QUALITY AND COVERAGE RATIOS
Designation
Definition/Utility
Calculation Basis
Conciliation with the Financial Statements
Overdue loans ratio
Loans quality indicator, showing the proportion of the gross loan
portfolio that is in default Historical financial performance indicator
Ratio between overdue loans and total loans
(BAL): Overdue loans, that is, loans with installments of capital and
interest in default and loans to customers, gross
Ratio of loans overdue for more than 90 days
Loans quality indicator, reflects the proportion of the gross loan portfolio
that has been in default for more than 90 days. Historical financial
performance indicator.
Ratio between loans overdue for more than 90 days and total loans
(BAL): Loans overdue for more than 90 days, that is, loans with
installments of capital and interest in default for more than 90 days and
loans to customers, gross
Non-performing loans ratio
Loans portfolio quality indicator, reflects the proportion of the gross
loans portfolio including cash and deposits with credit institutions
that are in a non-performing situation. Historical financial performance
indicator.
Ratio between the total balance of loans agreements with customers
and cash equivalents and investments in credit institutions identified
as: (i) being in default (internal definition in line with Article 178 of the
Capital Requirements Regulation, that is, contracts with higher material
defaults) 90 days and contracts identified as unlikely to pay, according to
qualitative criteria; and (ii) having specific impairment and total loans
(BAL). Loans identified as non-productive loans and Gross customer
loans
Forborne ratio
Instruction No 32/2013 of Banco de Portugal
Loans quality indicator, reflects the proportion of the gross loan portfolio
that was restructured. Historical financial performance indicator.
Ratio between forborne and total loans
(BAL). Loans identified as restructured due to financial difficulties of the
customer and loans to customers gross
Overdue loans coverage
Indicator of the ability to absorb potential losses related to loans default
Historical financial performance indicator.
Ratio between balance sheet impairments for loans to customers and
the amount of overdue loans
(BAL): Provisions for loans and overdue loans to customers
Coverage of loans overdue for more than 90
days
Indicator of the ability to absorb potential losses related to loans default
for more than 90 days. Historical financial performance indicator.
Ratio between balance sheet impairments for loans to customers and
loans overdue for more than 90 days
(BAL): Provisions for loans and loans to customers overdue by more than
90 days
Non-performing loans coverage
Coverage of loans to customers
Cost of Risk
Indicator of the capacity to absorb potential losses related to non-
performing loans default. Historical financial performance indicator.
Ratio between balance sheet impairments for loans to customers and
non-performing loans
(BAL): Provisions for loans and non-performing loans
Indicator of the ability to absorb potential losses related to the customer
loan portfolio. Historical financial performance indicator.
Ratio between balance sheet loan impairments and gross loans to
customers
(BAL): Provisions for loans and gross loans to customers
Measure of the cost recognised in the year to cover the risk defaultin the
customer loans book -historical financial performance measure
Ratio between impairment charges recorded in the period for loans risk
and the balance of loans to customers gross
(DR): Reinforcement of provisions for loans, in the year
(BAL): Gross customer loans
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES EFFICIENCY AND PROFITABILITY RATIO
Designation
Definition/Utility
Calculation Basis
Conciliation with the Financial Statements
Efficiency I
Instruction No 16/2004 of Banco de Portugal
Efficiency II
Instruction No 16/2004 of Banco de Portugal
Cost to Income
It expresses the proportion of income necessary to cover the staff costs
incurred. The lower the value of the indicator, the higher the level of
efficiency of the organization’s human resources. Historical financial
performance indicator.
Expresses the proportion of income necessary to cover operating costs
incurred. The lower the value of the indicator, the greater the level of
efficiency of the organization. Historical income financial performance
indicator.
It expresses the proportion of income necessary to face the operating
costs incurred and allows to measure the progression of efficiency levels.
The lower the value of the indicator, the greater the level of efficiency of
the organization. Historical financial performance indicator.
Ratio between staff expenses and banking income
(DR): Staff expenses
Ratio between [administrative expenses and depreciation] and banking
income
(DR): Operating costs include Staff expenses, Other administrative
expenses and Depreciation
Ratio between operating costs and banking income
Profitability
Instrucao n°16/2004 do Banco de Portugal
Expresses the banking income (in%) generated by the asset, in the
period and provides an analysis of the capacity to generate income per
unit of assets used. Indicator of historical financial performance.
Ratio between banking income and average net assets
Return on average net assets
Instruction No 16/2004 of Banco de Portugal
Expresses the income (in%) generated by the asset, in the period and
provides an analysis of the capacity to generate results per unit of assets
used. Indicator of historical financial performance.
Ratio between profits or losses of continuing operations before taxes
and average net assets.
Return on average equity
Instruction No 16/2004 of Banco de Portugal
Expresses the income (in%) generated by equity in the period and
provides information on the efficiency with which capital is used to
generate results. Indicator of historical financial performance.
Ratio between profits or losses of continuing operations before taxes
and average equity.
(BAL): Active; the calculation of the average net asset includes, in
addition to the values at the ends of the period under analysis, the
values recorded in each of the months in the interval considered.
(DR): Profit or loss from continuing operations before taxes (BAL):
Assets; the calculation of the average net asset includes, in addition to
the values at the ends of the period under analysis, the values recorded
in each of the months in the interval considered
(DR): Profit or loss from continuing operations before taxes (BAL):
Equity; the calculation of average equity includes, in addition to the
values at the ends of the period under analysis, the values recorded in
each of the months in the interval considered.
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Annual Report 20211.0 WHO WE ARE 2.0 OUR STRATEGY 3.0 OUR PERFORMANCE 4.0 CAPITAL, LIQUIDITY & RISK 5.0 CORPORATE GOVERNANCE 6.0 STATEMENTS 7.0 ALTERNATIVE PERFORMANCE MEASURES Sustainability Report
2021
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 Contents
Sustainability Report 2021
1.0 HIGHLIGHTS
2.0 SUSTAINABILITY STRATEGY
3.0 SUSTAINABILITY GOVERNANCE
4.0 OUR PERFORMANCE
5.0 ESG PERFORMANCE INDICATORS
6.0 ABOUT THIS REPORT
94
96
104
108
131
140
93
Annual Report 2021 1.0
HIGHLIGHTS
1.1 ESG Performance in 2021
Ricardo Manuel Santos Freire
Retail South Department - Customers Assistant
Maria Inês Ferreira
Retail North Department - Senior Customer Assistant
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 1.1 ESG PERFORMANCE IN 2021
2021 was, worldwide and once again, a more challenging year than anticipated. In this context, the
group was especially aware and committed to making a positive impact on the communities it serves
and to supporting its clients to overcome their challenges and thrive, contributing to lessen the adverse
socio-economic impacts of the Covid-19 pandemic that carried over into 2021, and to promote long-
term sustainable and just economic and social development.
But 2021 was also the year in which we redesigned our medium and long-term ESG strategy, integrating
even more deeply sustainability and environmental, social and governance issues in the way we work
and do business, with the ambition of reducing the direct environmental impact of our business and
supporting our clients in their sustainability journeys and in the transition to a low-carbon economy.
This report aims to share novobanco Group’s vision and agenda regarding the main sustainability
challenges in the financial sector.
ENVIRONMENT
18.5%
REDUCTION OF CO2 EMISSIONS
- SCOPES 1, 2 AND 3
SOCIAL AND FINANCIAL
WELL-BEING
RESPONSIBLE BANKING
€1.5 mn
IN LOANS TO SMALL
AND MEDIUM-SIZED COMPANIES
10,9 thousand
MINIMUM BANKING
SERVICE ACCOUNTS
36.2%
OF WOMEN IN MANAGEMENT
POSITIONS
58.6 thousand hours
OF ESG TRAINING
26.5%
REDUCTION OF PHOTOCOPY
PAPER CONSUMPTION
11.6%
REDUCTION OF WATER
CONSUMPTION
70%
OF EMPLOYEES MOTIVATED
AND AVAILABLE TO EXCEED WHAT
IS EXPECTED OF THEM
1,6 mn
INVESTED IN THE COMMUNITY
156.8 thousand
CARBON NEUTRAL ACCOUNTS
722.2 thousand
ACTIVE DIGITAL CLIENTS
311 branches
OF WHICH 51 IN LOW
POPULATION DENSITY MUNICIPALITIES
€388.7mn
IN ECONOMIC VALUE DISTRIBUTED
52%
OF SUPPLIERS WITH ESG SCORING
14.2 thousand hours
OF TRAINING IN PREVENTION OF MONEY
LAUNDERING AND TERRORIST FINANCING
95
1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 2.0
SUSTAINABILITY
STRATEGY
2.1 Our material issues
2.2 Risks and opportunities arising from climate change
2.3 Our ESG strategy
2.4 Our commitments
2.5 Our partners
Hernâni Oliveira
Rating Department - Senior Risk Analyst
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 We are aware of the important role of the financial sector in the current context where combating climate change is an imperative and sustainability issues dominate the world agenda. This is a defining
moment, and one that implies the adoption of a structured, ambitious and effective approach to the environmental and social challenges of the transition to a sustainable and low carbon economy.
Our strategy and approach tackle environmental and social issues not only as risks but also as opportunities that we want to see intrinsically embedded into the business strategy, ensuring the evolution of
the governance and risk management model and a culture of transparency in the disclosure of information. We listen to our stakeholders and define our priorities with them.
Shaping the future together.
2.1 OUR MATERIAL ISSUES
The definition of our business strategy is intrinsically linked to a collaborative and proactive approach to all our stakeholders. To build and nurture a continuous relationship with our stakeholders and integrate their
concerns and expectations, novobanco has in place a wide range of communication channels.
EMPLOYEES
CLIENTS
REGULATORS
SUPPLIERS
MEDIA
COMMUNITY
Request for in-person feedback via questionnaires and
Request for by phone, online and in
Provision of mandatory and voluntary
meetings;
person;
information
Intranet (Somos novobanco, Yammer and Human
Resources Portal)
Thematics Mailboxes Email (including CEO Office and
“Ask the Chairman” address”)
HCD manager for active and retired employees
Human Resources Business Partner
Executive leadership visits to the commercial network
Whistleblower line
Workshops and Lectures
Annual Meeting and other thematic meetings,
workshops, clarification sessions and webinars
Workers Committee, Union Secretariat and Information
and Consultation Procedure
Formal system for filing complaints;
Branch Network, Corporate Centres
and Regional Divisions;
Social networks (novobanco
Cultura, novobanco Facebook and
Linkedin)
Events, such as novobanco
Summit
Request for feedback by phone, online
and in person.
Investor Relations team
Regular meetings with investors
Quarterly results presentation
Investors website
Contacts established through a
specific website (Grupo novobanco
Supplier Portal), coordinating the
exchange of information via e-mail,
telephone and in person.
Information provided in-person, by
phone and online;
Press conferences
Quarterly results presentation
Sharing of specialized knowledge
through social networks and media
(radio, newspapers, televisions).
Continuous in-person, telephone
and online dialogue with
Associations, Private Social
Solidarity Institutions, social and
environmental NGOs;
Corporate Social Responsibility
Initiatives
Participation in conferences
Social networks (novobanco
Cultura, novobanco Facebook
and Linkedin)
97
1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 In addition to recurring interactions, we also regularly assess the materiality of ESG (environment,
social and governance) issues by means of a questionnaire, relying on the strong involvement of our
various stakeholders to identify ESG opportunities, risks and challenges in the management of our
business. Through this consultation, we sought to analyse the main concerns and define the topics
with the greatest potential impact for successful management and consequent creation of value, not
only in the short but also in the long term.
The 2021 sustainability materiality assessment was carried out based on a consultation to our
stakeholders, with contributions from our clients, employees, investors, suppliers, non-governmental
organisations and novobanco Group’s decision-making bodies that allowed us to define the material
issues and Sustainable Development Goals (SDGs) for the novobanco Group:
LISTENING TO OUR STAKEHOLDERS
AND IDENTIFYING OUR MATERIAL
ISSUES
I
S
E
D
O
B
T
N
E
M
E
G
A
N
A
M
The Bank's Financial Performance
To incorporate ESG risks and criteria in the supply
of products and services
Customer experience
Innovation and digitisation
Financial and digital literacy
Governance, remuneration policies and ethics
Human Resources Management
Gender Equity and Equality
STAKEHOLDERS
98
1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021
To define our ESG strategy, commitments and goals, we structured our approach along 3 axes that reflect how we address the material issues and sustainable development goals identified by our stakeholders.
Our
ESG P
SUSTAINABLE
BUSINESS
Robust Financial Performance
Generating value for all our
stakeholders
Sustainable operations
Minimizing the negative environmental
impact from our operations, promoting
innovation and digitization
Responsible Investment
Incorporating ESG risks and
opportunities in our business model
and commercial offer
SOCIAL AND FINANCIAL
WELL-BEING
Well-being, Diversity and Inclusion
Recognizing the value of our people,
promoting their well-being and growth in
a diverse and inclusive corporate culture
RESPONSIBLE
BANKING
Role Model for Positive Impact
Acting transparently and ethically,
within a robust governance model.
Promoting equity and gender equality
Customer Experience
Serving our customers with
convenience, proximity and
transparency, ensuring a fair value
exchange
Community
Fostering Portuguese economic growth
and promoting financial and digital
inclusion in the communities we serve
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 2.2 RISKS AND OPPORTUNITIES
ARISING FROM CLIMATE CHANGE
Concerns about environmental degradation and climate change take a prominent place on the global
political agenda and consequently in businesses and the financial sector. The transition to a low carbon
economy with strong emphasis on circularity involves risks and opportunities for the banking sector,
while giving rise to new ways of doing business:
• Redirecting financial flows towards sustainable investments;
• Shifting the investment in the most polluting sectors by supporting companies’ transition efforts;
•
Integrating environmental, social and governance risks into the risk analysis;
• Managing under a medium and long-term perspective.
We recognise that assessing, quantifying and managing these risks and opportunities is still a rapidly
evolving challenge that will require us to revisit and evolve our options, models and approaches over the
coming years. This does not prevent us, however, from taking immediate action, building a robust but
flexible and evolving transition strategy, progressively incorporating environmental and climate risks
into our business model, adopting measures to combat global warming and reducing and mitigating the
negative impact arising from our activity.
To address the opportunities and mitigate the risks arising from climate change, ESG risk management
is included in the group’s overall sustainability framework and business plan.
In this context, the ongoing developments in the ESG risk management system are crucial, focusing on
the disclosure of non-financial information on the sustainability strategy and ESG risk management,
the effective alignment with regulatory and supervisory expectations in this matter, and the
implementation of ESG risk monitoring routines and assessment practices, involving the integration of
specific controls in the business that guide origination.
For more information on ESG Risk Management at the novobanco Group, see chapter 4.3 Risk
Management, in the Management Report.
Main Risks
Main Opportunities
Physical risks from climate change that
derive from the increasing severity and
frequency of extreme weather events.
Investment and financing needed for the
transition to a decarbonised economy and
the mitigation of climate change impacts.
Transition risks arising from gradual and
Sale of new products and services,
long-term changes in the Earth's climate or
from regulatory and legislative changes
that may directly or indirectly affect
companies, forcing them to alter their
operations and business model or making
their activities unviable.
including:
Green investment funds
Social investment funds
Green and/or sustainable financing
2.3 OUR ESG STRATEGY
The group has set itself the important goal of becoming a reference ESG entity in Portugal, contributing
to the promotion of sustainable investment practices and to accelerating the process of transition to a
carbon-neutral economy.
We are therefore developing our sustainability strategy, with special focus and priority given to the
integration of climate risk into the business and risk management model, responding not only to the
European Union’s initiatives under its action plan on sustainable finance and the expectations and
recommendations of regulators, supervisors and sector associations, but also taking into account the
needs and expectations of our clients and the market.
CLIMATE CHANGE IS ONE
OF OUR MAIN PRIORITIES
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 Our approach to address climate and social risks and to promote a positive social and economic impact
in the communities we serve is structured around 3 pillars:
1. Business strategy Adaptation:
•
Integrating ESG risks into risk management models, developing and adapting assessment,
quantification, decision-making and monitoring models that guarantee alignment with the business
strategy.
• At internal management level: minimising ESG risks to people and the planet and reinforcing the
sustainability principles on the basis of which we interact with our suppliers;
3. Disclosure and Reporting
• At banking activity level: supporting, on the one hand, investment and financing of clients in their
sustainability journeys and in the orderly and just transition to a low carbon economy and, on the
other, providing a response to clients who seek to incorporate responsible investment principles and
environmental concerns in their financial assets’ management;
• Pursuing an approach based on knowledge-sharing partnerships that maximise the impact of our
initiatives, and consistently joining national and international initiatives to promote sustainability.
In this context, we are reviewing and adapting our financing and investment strategy, risk appetite and
product and service offering to ensure a gradual alignment of the portfolio to meet COP26 goals, the
EU Action Plan and national climate commitments.
2. Risk Governance and Management
•
Implementing a governance and management model for material ESG issues at all levels of the
business to promote a culture and actions that foster the transition to a sustainable socioeconomic
development model, leading to responsible growth, job creation, people advancement and respect
for the environment;
• Committing ourselves to disclosing accurate and transparent activity reports from a sustainability
perspective, informing on the group’s position to internal and external stakeholders.
2.4 OUR COMMITMENTS
Having embraced the important goal of becoming an ESG reference entity in Portugal, integrating
sustainability into its business model, the novobanco Group defined a set of commitments and
ambitions that embody the ESG issues that are essential for the group and underpin its Sustainability
Strategy.
Carbon Footprint
To reduce the Greenhouse Gas
emissions in our own operations
(scopes 1 and 2) by 50% by 2030
To increase the weight of low
emission vehicles (electric and hybrid)
in the group's fleet to 50% by 2024
and 100% by 2030
To consume 100% of electricity from
renewable sources by 2024**.
** In all locations where this is possible and the contract
is signed by the group
Gender Equality
To increase the representation of
women in senior leadership positions
by 4.5 p.p. by 2024
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 The commitments of Novo Banco, SA:
The Social Dividend Programme, whose 1st edition ran from 2017 to 2021, has been reformulated and is now running its 2nd edition, focused on the strategic priorities for the 2022 - 2024 triennium and structured
into 3 distinct but complementary programmes: #Environment; #Social & Well-being; #Responsible Banking.
ENVIRONMENT
SOCIAL
AND FINANCIAL
WELL-BEING
+ €600 mn
of Green
Investment1
(vs. 2021)
€0 mn
of financing
to excluded
sectors2
30%
of investment
products with ESG3
characteristics
- 30%
of Paper
consumption4
(tonnes, vs. 2021)
-28%
Of CO2 emissions
from own
operations5
(tonnes. vs. 2020)
40%
of the employees
benefiting from
the social Well-being
programme6
+ 3 p.p.
of employees with
psychosocial risk
assessment
of “Healthy”7
+ 8 p.p.
in employee
engagement
level 8
(vs. 2021)
+ 11.8 points
in clients NPS
indicator9
(vs. 2021)
+ 9.594
hours of employees’
voluntary service
hours 10
(vs. 2021)
RESPONSIBLE
BANKING
+ 2.5 p.p.
of Women
in senior leadership
positions11
- 0.9 p.p.
in gender pay gap12
+ 3
Partnerships with
organisations to
promote the
employment of people
with disabilities13
90%
of suppliers with
sustainability
score14
+ 39.160
ESG training hours
to the employees
1. Origination of financing or own portfolio investments in companies whose main economic activity is eligible to the EU Taxonomy and origination of financing or own portfolio investments where the use of funds by the borrower or the projects are directed to economic activities eligible to the
EU Taxonomy or are aimed at investments in energy transition or the transition of the company’s business model towards green activities; 2. Economic sectors not financed by novobanco: Weapons, Prostitution, Pornography, Coal (mining and energy production) and Illegal trade of exotic or
endangered species; 3. Investment Funds, Financial Insurance and Structured Products; 4. Reduction of photocopy paper consumption thanks to the implementation of the Phygital programme in the commercial network (started in 2019) and the dematerialisation of processes in the central
services; 5. Scope 1 and 2 GHG emissions; 6. Percentage of employees who benefited from at least 2 programme initiatives per year. Programme of initiatives to promote balance between personal and professional life, mental and physical health, healthy living, etc.; 7. Annual psychosocial risk
assessment study of novobanco’s employee base; 8. Assessment of the level of employee engagement carried through the Pulse survey (average % of employee engagement); 9. Net Promoter Score calculated for Individual Clients - BASEF; 10. Promotion of volunteering actions in strategic
areas of social impact of the bank. Each employee can take 1 day leave per year for volunteer work; 11. First line managers and Executive Board of Directors; 12. “Gender pay gap weighted by the representativeness of each Performance Function” 13. Number of organisations with active
partnerships being promoted by the Bank; 14. Recurrent suppliers to novobanco Group with annual turnover above 10 thousand euros.
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The path to sustainability cannot be trodden alone. Therefore, on this journey we have joined a group
of relevant partners for the execution of our strategy:
Signatory
Corporate citizenship initiative which had its origin, back in 2000,
in a proposal by the then UN Secretary-General, Kofi Annan. It is
based on ten fundamental Principles, in the areas of human rights,
labour practices, environmental protection and anti-corruption,
and aims to promote businesses’ public and voluntary
commitment to endorse these principles.
Member
Non-profit association that brings together and represents more
than 90 leading companies in Portugal, which are actively
committed to the transition to sustainability.
Member
Organisations for Equality Forum, created in 2013, comprises 69
organisations committed to reinforcing and highlighting their
organisational culture of social responsibility, incorporating, in their
strategies and management models, the principles of equality
between women and men at work.
Associate
Main entity representing the Portuguese banking sector, it was
created in 1984 to strengthen the financial system and contribute
to the development of a more solid banking sector.
Associate
Portuguese Association of Investment and Pension Funds and
Asset Management Firms, which represents the interests of
Mutual Funds management, Real Estate Funds management,
Pension Funds Management and Asset Management, viewing a
more efficient defence of these activities.
Associate
The Portuguese Quality Association is a non-profit organisation,
founded in 1969, that aims to promote and disseminate
theoretical and practical knowledge in the field of Quality and
Excellence in Portugal.
Member
Global Compact accelerator programme, which supports
companies in setting ambitious targets for women's
representation and leadership in senior management.
Associate
National Customer Satisfaction Index is a system for measuring
the quality of goods and services available in the national market,
through customer satisfaction surveys.
Member
The Inclusive Community Forum (ICF) is a Nova SBE initiative
dedicated to the lives of people with disabilities and aiming to
promote a more inclusive community.
Subscriber
Document presented by the United Nations Global Compact,
which has as its main objective to achieve the transition to a
low carbon economy and to avoid the overheating of the
atmosphere.
Member
Non-profit business association, which work in Social
Responsibility and Sustainability. It is part of the European
network of CSR Europe, a leader in sustainability and corporate
responsibility, supporting several sectors at a global level, in the
transformation and search for solutions for sustainable growth.
Subscriber
Letter of Commitment to Sustainable Finance in Portugal,
which aims to contribute to the promotion of sustainable
investment practices.
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SUSTAINABILITY
GOVERNANCE
3.1 Main ESG Policies
Maria da Conceição Lopes Xavier
Operations Departament - Technician Assistant
Alexandre Fachada
Operations Departament - Operations Assistant
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 To the novobanco Group it is essential to conduct its activity with the firm resolve to make a positive
contribution to the entire ecosystem within which it operates. This course of action requires a
robust governance model, sustained by policies and principles of ethics and transparency that
ensure effective and prudent management.
Shaping the future together.
novobanco recognises that progress in terms of sustainability requires solid governance and an
organisational model that guarantees the success of its implementation, ensuring accountability,
mobilisation and alignment at all levels of the organisation. Under this premise, and to ensure adequate
coordination of this issue, the bank revised its sustainability governance structure, under the following
principles:
• To ensure that the Executive Board of Directors (EBD) and remaining management team have
ESG expertise, through the implementation of specific training paths adapted to novobanco’s
strategic priorities, and also ensure that this knowledge is spread among all employees, for growing
sustainability literacy;
• To ensure the creation of a specific forum that leads sustainability discussions and initiatives,
supported by a specialised team responsible for coordinating novobanco Group’s ESG approach and
by the assignment of specific competences and responsibilities to relevant departments that will
ensure the integration of ESG in the various activities of novobanco.
Given the high pace of transformation occurring in all sustainability matters and the stage of maturity of
the integration of ESG issues into the institution’s business model, in 2021, the novobanco Group set up
a Sustainability Steering Committee, with the participation of members of the EBD and multidisciplinary
teams from the bank and subsidiaries, which meets monthly in order to accelerate the implementation
of priority ESG initiatives.
This monthly forum allows a structured assessment and approach to sustainability, enabling its
implementation across the entire organisation, and adding the environmental, social and governance
dimensions to the economic dimension, to ensure:
• The definition of the strategy, positioning and action plans related to sustainability issues and their
alignment with the action plans of the group’s different operations and business areas;
• Monitoring the development and implementation of the established action plan and initiatives, and
coordinating the teams appointed to support the implementation of the plan;
• Monitoring the impact of initiatives and the performance of the main indicators against the defined
ambition;
• Liaising and coordinating with all relevant stakeholders and reporting on performance through the
different internal and external communication channels.
3.1 MAIN ESG POLICIES
Our commitments are present in our policies and other relevant documents available on our institutional website.
EQUALITY AND
NON-DISCRIMINATION POLICY
Establishes the principles of non-discrimination and promotes equality:
1st) Prohibition of discriminatory practices on the grounds of gender, race, colour, creed, socio-economic conditions or sexual orientation;
2nd) Promotion of adequate work conditions for employees with disabilities;
3rd) Prevention and control of practices which may give rise to discriminatory situations of any type.
HUMAN RIGHTS POLICY
Advocates respect for human rights and defines procedures to deal with any transgression of these rights. novobanco acts in full
compliance with the law.
It promotes respect for human rights and decent work practices within its sphere of influence, namely among its employees, clients,
partners, suppliers and remaining stakeholders.
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The Code of Conduct aims to disseminate the principles that should steer the companies and activities of novobanco Group, promote
an ethical conduct, aligned with the group's values, and foster respect for and compliance with all applicable laws and regulations and
a transparent system of relations with the outside world.
SUPPLIER RELATIONSHIP
PRINCIPLES
Establishes the minimum requirements, set not only to suppliers but also to the group, with regard to business practices, health and
safety at work, ethics and environmental management.
REMUNERATION POLICY
OF NOVOBANCO EMPLOYEES
Remuneration principles and rules for novobanco employees established under the terms of article 115-C of the General Law on
Credit Institutions and Financial Companies (Regime Geral das Instituições de Crédito e Sociedades Financeiras).
REMUNERATION POLICY
FOR THE MANAGEMENT
AND SUPERVISORY BODIES
Remuneration principles and rules for the members of novobanco’s Management and Supervisory Bodies established under the
terms of article 115-C of the General Law on Credit Institutions and Financial Companies.
RISK APPETITE
Establishes, among others, the exclusion from financing and investment of sectors that may negatively impact Sustainable
Development, namely: mining sector associated to coal, pornography and prostitution, weapons (except if associated to national
defence), and illegal trade of endangered or exotic species.
POLICY ON THE PREVENTION
OF MONEY LAUNDERING
AND TERRORIST FINANCING
Establishes the rules, procedures and key elements for the bank's counterparties and respective transactions that allow the bank to
detect and prevent potential money laundering and terrorist financing activities.
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OF INTEREST
Establishes the set of principles to be observed by novobanco and the novobanco Group to identify, prevent, and mitigate
conflicts of interest in the development of their activities, and provides the specific procedures to be adopted within novobanco
to manage, remedy and log situations of conflict of interest that may arise.
WHISTLEBLOWING POLICY
Regulates the reporting of irregularities by the bank's employees, as well as by service providers or any third parties, and its
objectives are to preserve the bank's reputation, effectively protect its assets and those of its clients, and prevent or detect in
advance any irregularities that may be committed.
RELATED-PARTY
TRANSACTIONS POLICY
Determines the procedures to be adopted to ensure that novobanco has, at all times, a comprehensive and updated list of its related
parties, establishes the internal rules and responsibilities relating to the identification of transactions proposed or planned by
novobanco that fall into the category of Related-Party Transactions, and establishes the internal procedures and responsibilities for
the review and prior approval of Related-Party Transactions.
SUSTAINABILITY POLICY
Defines the sustainability positioning of the novobanco group and identifies its commitments and guiding principles with respect to its
material issues at environmental, social and governance (ESG) level.
More information on novobanco group’s governance model is provided in chapter 5 CORPORATE GOVERNANCE of the Management Report.
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OUR
PERFORMANCE
4.1 Our clients
4.2 Our employees
4.3 Our suppliers
4.4 The reduction in our direct environmental impact
4.5 Community
Vânia Elias
South Retail Department - 360 Senior Client Manager
Nelson Soças
South Retail Department - Branch manager
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 Based on our Sustainability Policy we have assumed a clear position and defined priorities for action
during the next three years, through which we want to develop a sustainable business based on the
following goals and guiding principles:
4.1 OUR CLIENTS
• Contribute to the transition to a low carbon economy;
• Support and promote financial and social well-being;
• Continuously strengthen our performance according to the highest standards of ethics,
responsibility and transparency.
In order to offer the best experience to our clients, the group seeks to gather as much information as
possible about what they want, when, where and how. Knowing our clients’ expectations and needs
throughout their life cycle allows us to identify opportunities for improvement, using a robust model for
monitoring the customer experience based on several action pillars.
Our performance is based on five values that define our positioning:
COLLABORATION
We collaborate with all stakeholders in order to achieve the best results
for our clients and for society
DYNAMISM
We embrace continuous transformation and reinvention in order to
remain relevant
Customer Experience
Monitoring Model
DIVERSITY
We reflect customer and employee diverse needs onto the solutions and
plans we devise and deliver
SERVICE
QUALITY
MOMENTS
OF TRUTH
DIGITAL
CHANNELS
QUALITY
INDICATOR
AD HOC
SURVEYS
EXTERNAL
SURVEYS
TRANSPARENCY
we maintain authentic and open exchanges of information among all
stakeholders
EMPATHY
we incorporate the voice of clients and society into the way we do
business
These principles and values guide our actions and the way we:
• Aspire to continuously respond to the ever-changing expectations and needs of our clients,
• Are committed to strengthening the relationship with our employees, promoting and valuing
diversity in the bank’s employee base as a strategic lever, and fostering an inclusive culture that
allows employees to fully realise their potential;
• Incorporate ESG criteria in our supplier selection models;
• Give back and generate positive impact through our activity, in the communities we serve.
Shaping the future together.
SERVICE
QUALITY
MOMENTS
OF TRUTH
DIGITAL
CHANNELS
QUALITY
INDICATOR
AD HOC
SURVEYS
EXTERNAL
SURVEYS
Monitoring the customer experience in all the commercial structures of the bank,
through a questionnaire designed to measure their satisfaction with the various
dimensions of service, as well as other global indicators.
Continuous monitoring of the customers’ experience immediately after the
main moments of their relationship with the bank, in order to identify
improvements that will allow us to meet their expectations and needs.
Customer satisfaction survey targeting the different aspects of the
digital channels (available features, ease of use, security, visual
attractiveness) and peer comparison.
Development of a Quality Indicator for the commercial network that
reflects the quality of service and other elements that impact the
customer experience.
Carrying out specific surveys on a case-by-case basis and using
different methodologies, depending on the critical topics of the moment.
Monitoring of external benchmark market surveys such as the ECSI (developed
by APQ and NOVA IMS), BASEF Banca (developed by Marktest), and the
Financial Services Barometer (developed DATA E).
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 The information obtained through this monitoring model is shared with the bank’s commercial
structures and with the central areas, enabling a set of actions to be taken that aim to improve the
customers’ experience with the bank in its various dimensions.
In order to correct the reasons for dissatisfaction conveyed by clients through satisfaction surveys, the
Restart programme sends a lead to the account manager’s workstation, thus allowing the commercial
network to assess the grounds for dissatisfaction and mitigate them whenever possible.
In 2021 we collected approximately 69.9 thousand replies to the satisfaction questionnaires made to
our individual and commercial clients.
Retail Banking
Our purpose is to create a value proposition that enables us to give an adequate response to our
clients. To this end we constantly seek to learn about the needs of our clients at every step of their
lives, actively listening to what they have to say through the various channels available, so as to
keep developing and implementing the product and service offerings that best suit their needs and
expectations.
In 2021, we collected approximately 65.2 thousand replies to the satisfaction questionnaires,
covering four segments of Retail: Individuals, 360º, Small Businesses and Singular.
87% of novobanco clients and 92.5% of novobanco Açores clients are very satisfied with the quality
of the service provided to them.
We also collected the opinion of around 17.5 thousand clients about their experience in the key
moments of truth in their relationship with the bank, and in particular with regard to the account
opening, mortgage loans, and personal loans.
The confidence index [1] of novobanco's clients stood at 77.5% in 2021 vs. 74.7% in 2020. The Net
Promoter Score (which calculates the intention to recommend the Bank) was 29 in 2021.
SERVICE QUALITY RETAIL NOVOBANCO
(%)
Singular
92.2%
4.9%
2.9%
Mass market and Micro Business
86.2%
9.7%
4.1%
360º
90.3%
6.5%
3.2%
Small Business
86.8%
8.8%
4.4%
Retail (total)
87.0%
9.0%
4.0%
Very satisfied
Satisfied
Not satisfied
MOMENTS OF TRUTH VERY SATISFIED COSTUMERS
(%)
93%
88%
94%
92%
83%
81%
SERVICE QUALITY RETAIL NOVOBANCO DOS AÇORES
(%)
Mass market and Micro Business
92.3%
6.0%
1.6%
360º
92.5%
7.1%
0.4%
Small Business
93.2%
4.4%
2.4%
Retail (total)
92.5%
5.9%
1.6%
Account Opening
Mortage Loans
Personal Loans
2020
2021
Very satisfied
Satisfied
Not satisfied
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Creating a value proposition for the Commercial segment that is innovative, competitive and
profitable, and bolsters novobanco's role as the reference bank for companies in Portugal, remains a
key priority, and the customers’ voice gives a crucial contribution to attaining this goal.
In 2021, commercial banking collected approximately 2.4 thousand replies to customer service
satisfaction surveys. The results show that 89.9% of the SME commercial clients and 84.4% of the
Large corporate clients are very satisfied with the bank's service, which demonstrates that the
bank's activity matches the needs of its clients.
In 2021 the SME clients’ confidence index was 77%. The Net Promoter Score stood at 32.2 in 2021,
which compares with 24.4 in 2020.
In the Commercial Clients segment, the bank also assessed the experience of 958 clients after
taking out a loan, and then shared the results not only with the commercial areas, but also with the
marketing areas, which used these data to support the introduction of innovations and the launch of
new products and services.
In the Large Corporates segment, the confidence index improved to 76.1% in 2021, from 74.2% in
2020. The Net Promoter Score also increased in 2021, reaching 20.
SERVICE QUALITY
Commercial Banking (%)
Corporate
84.4%
14.8%
0.8%
Medium-sized
89.9%
8.0%
2.1%
Very satisfied
Satisfied
Unsatisfied
Clients may lodge complaints through several channels, and an effort is made to solve problems at the
first contact with the client. The establishment of honest, transparent and continuous contact with
the clients requires fast and efficient replies to their comments or complaints, which helps develop a
relationship of trust.
At novobanco and Banco Best, the rate of complaints was 0.30 per thousand active clients in 2021,
a significant reduction compared to 2020 that reflects the customer satisfaction with the service
provided. In recent years clients have shown increasing preference for using the digital channel to
submit their complaints, especially at Banco Best where all clients have online access. At novobanco
dos Açores this rate was 0.26.
CANAIS PARA APRESENTAÇÃO DE RECLAMAÇÕES
COMPLAINTS RATE/ACTIVE CLIENTS
ONLINE
DIRECT LINE
BRANCHES
CORPORATE
CENTERS
0.35
0.30
0.32
0.30
0.26
0.19
E-MAIL
ON LINE
FORM
LETTER
novobanco
Banco Best
novobanco dos Açores
2020
2021
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Adjusting products and services to customer needs, new market trends and regulatory
requirements has been the basis for the redefinition of novobanco group’s offer, which is
increasingly more attuned to environmental, social and ethical concerns.
Supporting our clients towards a sustainable and carbon-neutral economy
Loans
ECO residential
mortgage loans
With a clear environmental focus, the client
can benefit from a bonus on the spread when
choosing to acquire a property with energy
certification A+, A and B.
With the firm resolve of contributing to the promotion of sustainable investment practices and
accelerating the process of evolving towards a carbon-neutral economy in 2050, in 2021 we made
several ESG products available to our clients, assuming an active role in supporting this transition to a
low carbon economy.
Individual
Clients
Efficient Home
2020 Line
Specifically in terms of support to companies, during 2021, novobanco positioned itself from the very
first moment as a strategic partner, providing financial support to small and medium-sized companies
(Capitalizar 2018-COVID-19 Credit Line, and Sectoral Lines of Support to the Economy) through loans
and the renewal of loan moratoria.
There was also a strong focus on the digital transformation of processes, investing in remote relationship
and signature tools.
As regards the Recovery and Resilience Plan and EU funds, novobanco intends to be a prominent partner
of companies, supporting them in the execution of their structural projects, either with complementary
financing or with other ancillary banking services, thus responding to this pressing challenge and
helping Portuguese companies to benefit from this opportunity.
The bank supports its customers in their journey towards sustainability, financing and supporting
investment projects aimed at energy transition, as well as projects with social concerns. The bank also
addresses the needs of clients that want financial products with ESG features for their investment
portfolio.
New disclosure requirements relating to sustainability have behavioural effects on companies’
business models as well as on their need for banking support and in this context, we aim to consistently
incorporate ESG factors into our financial products and services in order to offer and differentiate
products tailored to the expectations of our clients and investors.
We have signed up to the "Business
Ambition for 1.5ºC” initiative, undertaking to
set science-based targets to reduce the
group's greenhouse gas emissions with a
special focus on Scope 3.
We signed the “Letter of Commitment for
Sustainable Finance in Portugal”, which aims
to contribute to the promotion of sustain-
able investment practices in the country,
with the purpose of accelerating the process
of transition to a carbon neutral economy by
2050.
Personal Loan
- Hybrid and
Electric Vehicles
Companies
Credit Line for
Decarbonisation
and Circular
Economy
These lines provide favourable terms on loans
intended to promote the improvement of the
environmental performance of private housing
buildings.
In October 2021, we introduced in the pricing
strategy of the Car Personal Loan (for new and
used vehicles) a 1% bonus for Vehicles eligible for
green mobility (plug-in, hybrid electric and non-
electric hybrids).
The purpose is to facilitate access to financing
for the implementation of sustainable projects.
This credit line is available for, among many
others, investment in the replacement of existing
equipment for more innovative, modern and
efficient equipment, investment in renewable
energy sources for self-consumption in the
production process or in circular strategies for
any stage of the product/service life cycle, and
for the implementation of monitoring, control
and action devices that optimise the conditions
of use, energy consumption and raw material
consumption.
AT BANCO BEST WE RECORDED 48% YOY
GROWTH IN THE VOLUME OF FUNDS/ETFS
INCORPORATING ESG FACTORS
Performance 2021
€17.18 mn
106 Clients
1.7% of total
mortgage loans
production in the
year
€0.236th
9 contracts
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is linked to the share performance of companies that stand out for their capacity to lead social and governance change subject to environmental and
social criteria. The selection of companies to integrate these products is
subject to a rigorous assessment process and criteria, which was further strengthened in 2021 not only in line with the bank’s risk policy, but also with
industry-sector exclusion criteria (companies producing or selling tobacco, or engaged in coal mining and nuclear energy are not eligible), and criteria
governing the exclusion of companies engaging in practices that breach human and labour rights, including child and/
or forced labour. When manufacturing, construction, transport, tourism, agriculture and forestry, electricity, gas and oil companies are at stake, the bank
undertakes to assess their environmental and social performance, and will not include companies with:
• Air pollutant activity: > 50% of turnover, or
• Reduction in the weight of their air polluting activity in the last 5 years by: < 5%, or
• No defined environmental objectives.
Performance 2021
novobanco
€88.3mn subscribed in 2021
Cumulative investment of €457.7mn in ESG/
ECO product subscriptions
63.2% weight in the total portfolio of
structured products
novobanco dos Açores
€1.3mn subscribed in 2021
Cumulative investment of €2.7mn in ESG/ ECO
product subscriptions
55.3% weight in the total portfolio of structured
products
Investment
ESG and novobanco
Structured Products
Investment
Funds that invest in companies committed to the environment and society, and to high standards of governance.
The group classifies these funds into two categories:
ESG Funds
• Category I - Article 8 SFRD (Sustainable Finance Disclosure Regulation) - funds that invest in companies that have
environmental, social and governance concerns.
• Category II - Article 9 - funds that have sustainable investment as their objective.
Performance 2021
More than 1,100 ESG funds with investment made by our clients
novobanco
Category I
28 funds with an investment of €162mn
46% weight in the total portfolio of distributed funds
Category II
3 funds with an investment of €188mn
54% weight in the total portfolio of distributed funds
Banco Best
Category I
1,003 funds with an investment of €244mn
27.3% weight in the total portfolio
Category II
129 funds with an investment of €26mn
3.0% weight in the total portfolio
34 ESG ETFs invested by our clients
Category I
32 ETFs with an investment of €2mn
Category II
2 ETFs with an investment of €52mn
Asset Management
NB Momentum
Sustentável Fund
It offers holders access to a diversified portfolio of assets of companies that adopt the best practices in terms of ESG criteria with the purpose of
achieving a consistent long-term valuation based on the three pillars of Sustainability. A minimum of 75% of the direct investment component of the
Fund is invested in companies with an ESG rating from Eikon above 50 points. The Fund will invest at least 85% of its net asset value in shares and other
securities which are convertible into shares or give the right to subscribe shares.
Performance 2021
€181.32mn
Weight of 20.2% in national funds under
management and 1.8% in total funds under
management.
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18.25 Account
26.31 Account
18.31 Account
Fully carbon-neutral accounts, with a lower environmental impact due to their low carbon footprint, because they are
online accounts with a large part of the day-to-day services free of charge when used online, and because the bank
neutralises the resulting emissions by supporting sustainable projects. The emissions produced are calculated according
to the PAS 2050:2008 methodology, which takes into account the entire life cycle of products and services. To
neutralise these emissions novobanco supports Soil & More, a green waste composting project in South Africa that not
only reduces carbon emissions but also contributes social and economic benefits for local communities and sustainable
development, and also the Kamuthi project to install a solar photovoltaic plant to replace power generation from coal-
fired power stations. NB 18.31 Accounts. The NB18.25 and NB26.31 accounts have an estimated carbon impact of around
944g CO2eq/year.
Performance 2021
106 076 18.31 Accounts – €209.8mn
39 948 18.25 accounts €52.1mn
10 773 26.31 Accounts – €28.6mn
14% weight in the bank’s total service accounts (individuals and small
businesses).
All accounts have their CO2 emissions neutralised, corresponding to 1,700
tonnes of CO2 neutralised, of which 202 tonnes in 2021.
These accounts have already permitted to neutralise the equivalent of
emissions from 308 single return flights between Lisbon and London.
Financial well-being / financial health
The adaptation of products to the needs of customers also involves the progressive integration of
social concerns. novobanco intends to increasingly adapt its products to the new and diverse realities
of its clients. Accordingly, its saving products allow for building up a nest according to each family’s
budget. In line with this positioning, the Bank offers a package of Micro Saving solutions comprising
three products, namely Planned Savings, Micro Savings and the Targeted Savings Smart app.
WE HAVE NEUTRALISED THE CO2 EMISSIONS OF THE
18.31, 18.25 AND 26.31 SERVICE ACCOUNTS, EVEN
THOSE NOT RESULTING FROM OUR CLIENTS, NAMELY
FROM COMPUTER USE, ATM ENQUIRIES AND CARDS,
AMONG OTHERS
Savings
Planned
Savings
Micro Saving
novobanco App_
(Targeted savings)
Allows clients to build up savings from as low as 10 euros per month through the subscription of a monthly plan in which the clients set the amount and
the time of month of deposits, thus adjusting savings
to their family budget
€672.36mn
in savings
122.5 thousand subscriber clients
This solution allows any client to start saving money by small amounts through the rounding up of debits of day-to-day expenses (such as residential
mortgage loan instalments or personal loan repayments, insurance premiums, or direct debits), which are transferred to a savings account.
€8.12mn
40.84 thousand subscriber clients
Exclusive product for Clients who have installed the novobanco App: once the client has defined his/her/their saving objectives (how much and for how
long he/she/they want to save) the novobanco app traces the path to reach this objective.
€8.12mn
40.84 thousand subscriber clients
Performance 2021
These savings products make up a total of €701.7 million and represent 7% of the total in term deposits and savings accounts (excluding savings accounts linked to service accounts).
Best Bank App (Targeted
Saving)
Minimum Banking Services
Minimum Banking Services
Account
Exclusive product for users of the bank’s App, where each client defines one or more objectives, setting a date and an amount and choosing a name and
an icon, and the bank calculates a savings plan for short-term goals. The client can stop saving at any time or withdraw part of the amount. The bank
sends e-mails with the status of the savings, recommending reinforcements, if necessary, as well as sending incentive messages.
For long-term objectives, Banco Best’s robot proposes an active management portfolio - an insurance-based investment advisory service that is
unique in Portugal and one of the first in Europe.
In addition to the initial recommendation each time the client checks his/her objectives the robot validates the performance of the investments and if
necessary, recommends changing portfolios, and near the end date it also proposes a gradual reduction of the portfolio risk to avoid market volatility.
220 thousand euros
250 clients
This account provides a wider coverage of financial services provision and therefore wider social inclusion. It gives clients a current account and a debit card and
the possibility to use the account through ATMs in the European Union, direct channels and bank branches. Its annual maintenance fee that cannot exceed the
equivalent of 1% of the social support reference rate at any given time.
This product is designed for:
•
Individuals who hold no other current account in any other institution, or who hold only one current account which is converted into a minimum banking
services account.
Individuals who hold other current accounts, but wish to open a minimum banking services account where one of the holders is over 65 years old or is dependent
on others.
•
Performance 2021
10.8 thousand Accounts
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 The service accounts of novobanco and novobanco dos Açores are associated with social responsibility
causes (social, cultural and environmental). When opening an account, customers can choose which of
the projects supported by Novobanco they wish to support:
Accounts
Performance 2021
BEST/RAIZE IN THE FINTECH REPORT PORTUGAL 2021
PROMOTED BY ASSOCIAÇÃO FINTECH PORTUGAL,
AS A CASE STUDY OF PARTNERSHIPS BETWEEN
FINTECHS AND BANKS
100%
and 360º
Accounts
Semear Project (Sow Project) - Social inclusion programme for
young people and adults with intellectual and developmental
difficulties, organised by BIPP, Associação Inclusão para a
Deficiência. The programme provides certified training, and
development of skills for employability and professional integration,
in the processing and production of components from organic
farming. This programme minimises the limitations of these young
people and adults by encouraging them to develop their full
potential and become autonomous.
Este Espaço Que Habito (This space I Inhabit) - promoted by the
Photographic Expression Movement (MEF) in 5 Educational
Centres hosting young people in compulsory internment, using
photography as
a technical and personal expression means to search for and
develop one’s own identity based on the spaces photographed. The
project is developed in partnership with the Ministry of Justice and
the Youth Justice Services.
Recreational Toys Recycling Project - Developed by ZERO WASTE
LAB, the project aims to help with the problem of what to make
with discarded plastic toys. It promotes the recycling and circulation
of plastic and other toy materials for new purposes and raises the
awareness of and educates citizens about the problems arising from
the increase in waste production.
Novobanco supports
these three projects
with a total amount
of €270.8 thousand.
4.1.2 Our digital transformation
Digital transformation is one of our strategic pillars. We want to bring innovation, agility and greater
efficiency to our processes, to our internal talent and above all to our clients, improving their
experience and leveraging on new information systems and data science solutions to better meet
their needs and expectations.
Shaping the future together.
We are an innovative bank with customer-centric solutions, focusing on convenience and offering a
unique personalised and omni-channel banking experience. We aim to accelerate the full digitisation of
processes to improve the customer experience and internal efficiency, addressing customer journeys
and transforming the operating model, while reducing the ecologic footprint associated with our
activity.
Still with regard to financing products, the group, through Banco Best, provides a collaborative financing
solution (crowdfunding) that allows individual clients to support micro and small businesses’ growth.
Collaborative Financing
Performance 2021
Collaborative
Financing – Banco
Best / Raize
Crowdfunding is an innovative and revolutionary solution,
100% digital, that brings investors and companies together
to grow their businesses through loans.
€0.2mn
133 Accounts
FINANCIAL AGGREGATOR OF NOVOBANCO
CORPORATE ONLINE WINS BEST BANKING
PROJECT AT THE PORTUGAL DIGITAL AWARDS
The digital offer covers all the different segments of the bank:
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 Individual Clients
Corporate Clients
The group offers the following solutions:
novobanco
• The novobanco App (launched at the end of 2020 and since then featuring constant improvements and
The group provides:
novobanco
• novobanco online homebanking service for companies, renewed in 2021, which includes the award-winning
novelties) has 436.1 thousand active clients, a 11.7% increase compared to 2020.
• The novobanco online homebanking service has 278.1 thousand active clients in 2021, a year-on-year reduction
of 0.5% that was driven by the migration to mobile and shows the preference of active digital clients for the
new app.
novobanco dos Açores
• The novobanco dos Açores App has 10.8 thousand active clients, an increase of 19.0% compared to 2020.
• The online homebanking service has 278.1 thousand active clients in 2021, a year-on-year reduction of 5.7%
that was driven by the migration to mobile, with the app being preferentially used for financial transactions.
Banco Best
All the clients have access to the web and app digital channels, with 75% of active clients having accessed them
in the last 3 months of 2021. The number of app accesses increased by 31% compared to 2021.
Financial Aggregator.
This is a digital financial management solution, pioneer in Portugal, that allows an aggregated view of all bank
accounts and the initiation of payments and includes features such as a financial calendar, the categorisation
of movements, and alerts and notifications, which contribute to improving the operational efficiency
of novobanco’s clients as well as to their digital transformation.
novobanco dos Açores
• Homebanking service for companies, which in 2021 recorded a 19.2% year-on-year increase in the number
of corporate customers with an active service. The clients’ preference for the homebanking for companies
was due to the set of solutions and services available to them, as well as the improvements and new func-
tionalities introduced in the service during 2021, which contributed to direct companies towards an environ-
ment of greater digitalisation, with benefits in terms of efficiency, management, lower financial costs and
negative environmental impacts.
As part of novobanco’s digital transformation strategy, and with a view to widening the scope of
this strategy, improving efficiency, and addressing environmental and social impacts, the following
solutions, deriving from the revision of the customer journeys, stand out:
NOVOBANCO APP WINS BEST UX/UI IN FINANCE
INITIATIVE IN THE BANKING TECH AWARDS 2021
Journey of the individual client
Corporate Clients’ Journeys
The novobanco App, with a completely renewed design and customer experience, is adaptable and
customisable, inclusive and predictive (based on data science) and offers a wide range of services and
solutions, including the aggregation of accounts with other banks. While reducing the ecological
footprint of the bank and its clients and increasing internal efficiency, it also contributes to improving
digital literacy levels.
In 2021:
We made new functionalities available: new options to subscribe to investment funds and life
insurance, improved online account opening by digital mobile key and video call, management of c
ategories of current account movements from any bank account, new digital portfolio
functionalities, among others;
We improved the customisation model with regard to behavioural aspects in the prediction of the 4
most probable transactions at each moment of the day, and also the user experience and security,
the latter through the replacement of SMS validation code by push notifications for the
confirmation of transactions;
The novobanco online for companies, now renewed with the Financial Aggregator, where all accounts
can be combined in a single solution, makes the financial management of the business easier and more
comfortable.
In 2021:
We revamped online banking for companies to improve the customer experience in using the
channel (browsing and searches, help templates, document area);
We introduced a functionality to securely send documents/files through the digital channel,
replacing the need to print paper (example: support documents to Factoring and Confirming
operations)
We introduced a budget management functionality in the financial aggregator (budgeting)
We extended access to the loans to small businesses digital solution to cover a larger customer
base. A totally secure process, with no need to deliver any documentation or go to the branch, with
funds made available in less than 48 hours.
We made the Life Insurance simulation and subscription process available in authenticated channels;
We enabled credit card applications for company representatives through the digital channels.
We made it possible to view and change personal data in the digital channels (for individual clients).
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 Digital channels – website
In 2021:
We launched the new content platform for the novobanco website (www.novobanco.pt), now in
Full SaaS, with personalisation integration via Data Science. Fully integrated with the
authenticated channels, it enables a more efficient content management and contributes to digital
customer activation and digital sales, thus fostering a paperless culture.
We launched the Non-Financial Offer (NFO) area on the bank's public website;
In the adverse scenario created by the consequences of the COVID-19 pandemic, novobanco used
digital transformation to support its clients, namely using Artificial Intelligence to predict and model
the impacts of COVID-19 on the national economy.
Throughout 2021, the bank continued to promote new data science capabilities:
• We enhanced the customer journeys through the development of customisation and personalisation
models and functionalities in the channels;
• We applied Machine Learning models in money laundering prevention methods;
• We provided support to businesses using propensity models, to activate or deactivate clients, or
We made available consultation and simulation functionalities for Home Insurance;
identify best offers;
• We built indicators to identify signs of risk in and support clients with moratoria;
• We developed the capability for timely assessment of the impact of the Covid-19 pandemic on the
economy (on families, businesses and activity sectors).
VERY SATISFIED CLIENTS
Digital Channels (novobanco)
ACTIVE DIGITAL CLIENTS
(novobanco Group)
88.9%
88.0%
89.2%
87.5%
82.0%
80.8%
656.4
701.4
419.5
467.9
novobanco Online
novobanco app
novobanco Online for companies
Active Digital Clients (thousand)
Active App Clientes (thousand)
2020
2021
2020
2021
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 In order to measure the impact of technological innovations on the customer experience, around 42,900
surveys were conducted throughout 2021, which permitted to assess the overall satisfaction with the
channels (app, novobanco Online and novobanco Online Companies) and the intention to recommend
them. In the specific case of the app, an in-depth survey was conducted to assess the experience of
using it and to identify opportunities for improvement, to which 880 responses were obtained.
4.1.3 Data privacy and security
The protection of customers can only be properly safeguarded if the activity of novobanco Group is
adequately protected. Therefore, and in accordance with best market practices and legal and regulatory
requirements, the group ensures the confidentiality, integrity and availability of information.
In 2021, we highlight the improvement of 1.2 percentage points in the assessment of novobanco Online
Companies, with the percentage of very satisfied clients rising to 82%, leading to an increase of 3.7
points in the NPS.
The app, the preferred customer interaction channel, shows the highest Net Promoter Score, of 54.7.
Banco Best
Best's public website was revamped with the inclusion of new product comparators and
micro-questionnaires on investments.
In account opening, already available by video call and Digital Mobile Key, in 2021 the process was
redesigned to improve the experience, and the possibility of opening an account with a foreign passport
was introduced (restricted to some European countries).
A further set of improvements was also introduced which included:
In the app:
Improvements in the user experience (e.g., introduction of the modular and omnichannel Investor
Profile Questionnaire) and introduction of more investment and trading options, both in terms of
products and of the information available (e.g., information on Indexes and Corporate Events and
whishlist)
Innovative tools such as the financial dashboard and the intelligent search for products, contents and
functionalities.
Capability to update customer data in real time and interactively.
Greater personalisation with the possibility of defining appointments and favourites, sharing
documents and operations or personalising background colours and photos and changing account
names, choosing the name by which you want to be addressed.
Introduction of a traveller area with geolocation, to subscribe to Travel Insurance.
On the website:
Redesign of the transactional website for clients with renovated menus and introduction of icons.
Improvements in the integrated wealth enquiries, with real price updates, information on capital gains
and losses and a sales simulator.
Customer protection is present in all the Bank’s activities, including the safety of the client, the security
of the transactions carried out, and the protection of the personal data of clients and remaining account
holders. To ensure privacy and the correct treatment of personal data, the group has developed a set of
procedures and internal rules, as well as a Privacy Policy, and its website provides detailed information
on the treatment of personal data.
Our relentless efforts to prevent, detect and react to the new cyber threats arising from digitisation led
to increased attention and stronger technical control.
The Bank invests in the strengthening of its software and continuously warns its clients about the
latest fraud attempts, issuing security advice for safe Internet browsing and safeguarding the security
of transactions and personal data, in the various channels (namely e-mail, direct channels, PC,
smartphone and tablet).
With the objective of ensuring global security in cyberspace, novobanco develops regular training and
awareness-raising activities on information security for all its employees. These contents are applicable
in a professional or personal context, and reinforce the fundamental role that all employees play in the
prevention of cyber risks.
The bank maintains the security contents in the digital channels, so that they can be viewed in a very
quick and practical way, at any time and from anywhere. This is essential to ensure confidence in the
ecosystem in the context of teleworking.
During 2021, the novobanco Group received no complaints originating from the National Data Protection
Commission (CNPD).
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Our employees are at the core of our business strategy. We are aware that they are our most valuable
asset. That is why developing a robust talent and merit programme is one of our priorities, as a
means of retaining and attracting the best and fostering an inclusive culture that allows employees
to realise their full potential.
Shaping the future together.
The novobanco Group is aware that good results come from an organisational culture that promotes
and values diversity as a strategic lever for transformation, innovation and growth, and that encourages
an inclusive environment that allows its employees to fully realise their potential. The Human Capital
Agenda is therefore one of the fundamental pillars of the bank’s strategic plan which, based on solid
governance policies and guiding principles, aims to respond to five major challenges:
Attracting and retaining talent
Caring for safety, health and well-being
at work
Addressing internal social responsibility
needs
Promoting gender equality, equal opportunities
and respect for diversity
Promoting the conciliation of professional,
personal and family life
53.6%
46.4%
Women
Men
4 193 EMPLOYEES
2 249
WOMEN
1 944 MEN
To implement our human capital strategy, we seek to follow the best fair-process practices in decision-
making, focusing not only on results, but also deploying a fair and reasoned process with strong
engagement of the employees, in order to deliver results. We thus endeavour to be aware of the needs
and difficulties experienced by employees throughout their life cycle and to meet their expectations,
so as to contribute to their full development, and allow them to fully unlock their potential and maintain
their motivation.
In a context where remote working assumes a prominent role in the day-to-day life of the organisation,
listening to and maintaining regular communication with the employees is essential.
novobanco therefore developed a regular, open, transparent and two-way communication from the
beginning and throughout the pandemic period based on internal communication platforms that are
agile, modern, efficient and collaborative. In addition to the Somos novobanco intranet, a privileged
channel to provide news, documents, forms and links to other internal platforms, we also highlight
the Yammer internal social network, which has the role of promoter of a digital community where all
employees, regardless of their function or geographical location, share their interests, doubts, projects,
achievements, challenges and mutual help.
Throughout 2021, 30 events on strategic topics for the organisation were also organised, with live
broadcast. The new distribution model, innovative digital solutions and the bank’s medium-term
strategy were some of the topics addressed.
These events were well attended and provided an opportunity not only to inform about the activity and
strategy of the bank, but also to generate open exchanges of information throughout the organization
with Q&A sessions.
In the context of the Covid-19 pandemic, and in order to bring together the teams that were in hybrid
working mode, the bank organised a 100% digital meeting in which, for the first time in its history, all
employees were called to participate. The meeting brought together more than 3,000 employees and
had a very positive assessment, with a satisfaction rate of 84%.
ENGAGEMENT SURVEY
20%
19%
35%
29%
10%
33%
14%
27%
13%
31%
45%
52%
57%
59%
56%
8%
22%
70%
14%
30%
57%
Would I stay at novobanco
even if I were offered the
same salary and/or benefits
in any other company?
Would I
recommend
novobanco as a
good company
to work for?
I am proud to
work at
novobanco
Globally, at the moment,
how would you rate your
level of satisfaction with
novobanco?
Every day I feel
motivated to
come to work
I am motivated and
available to go beyond
what is expected of me,
to help drive
novobanco's success
Engagement
% Favourable
% Neutral % Unfavourable
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 Every six months we conduct an Engagement Survey, one of the main tools to sound the organisational
climate of the bank, - which had a participation rate of around 82% -, as well as an Internal Customer
Satisfaction Survey and a Psychosocial Risk Questionnaire.
WE CREATED OUR BRAND
WITH THE VOICE OF OUR EMPLOYEES
At novobanco dos Açores, the employee engagement favourability rate stood at 53% in 2021, up by 10
p.p. on the results of the survey conducted in October 2020.
As regards the Net Promoter Score, there was also an improvement of around 8 p.p. in the number of
promoters. Notwithstanding the large investment still to be made in this area, the evolution already
reflects the results of the various initiatives that have been developed in various dimensions and that
have allowed employees to feel novobanco dos Açores as their second home.
At Banco Best, the employee engagement favourability rate was 77%, up by 4 p.p. compared to the
results of the survey conducted in February 2021 and by 19 p.p. when compared to the results of
the first survey, carried out in 2018. In the Net Promoter Score, the number of promoters is now 20,
having increased by 12 since February, which places Banco Best at the level of finetuning. The positive
evolution in 2021 was due to a strong involvement with employees, namely through:
• Collection of ideas from all employees;
• Creation of 4 working groups for the translation and implementation of feasible initiatives;
•
Improved cooperation between divisions;
• Greater clarity in division communication with the teams (regular meetings instituted);
• Regular meetings of Management with the entire Bank to present results and clarify the strategy,
with the possibility of questions being asked.
• Better dissemination of initiatives and measures aimed at the employees on the website (Best ON)
2021 will be marked as a turning point and the year of the rebranding of novobanco, a rebranding
process in which the employees actively participated both in its construction and in its internal and
external promotion, by playing as actors in brand campaigns.
The process of creating the novobanco brand was centred on the employees.
The new image of the novobanco Group was born from a collaborative process,
unheard of worldwide. The creation of the brand’s visual identity involved the
development of an app in which the employees recorded their voice. The graphic
representation of the individual voice waves was put through a mathematical
and digital model, resulting in a collective voice wave that represents the voices
of those who, on a daily basis, are the most important component of the group’s
relationship with its clients. The brand was thus born with a purpose of unity
and collaboration.
The brand, born from the voice of the employees, was unveiled first-hand at a live event that brought
together all the employees for the first time, for which the bank set up the conditions for everyone to
watch it as a team. So that employees who were unable to travel to Lisbon could also experience this
moment live and as a team, “audiences” were created in 7 branches throughout the country, as well as
in the branches abroad.
4.2.1 Attracting talent and merit
Attracting and retaining talent continues to be one of our major objectives. To this end we have in place
a set of means and initiatives not only to capture new talent but also to retain existing talent from
within the personal and professional development of all its employees, which are deployed under a
4-stage model:
1
CAPTURE
OF TALENT
Responding to the recruitment and rejuvenation needs of the bank's staff while at the same time enabling young students to acquire new skills that will enrich their curriculum and
expand their contact network.
Talent Attracts Talent Programme - the third edition of this programme hosted 50 young graduates, who were distributed by 22 departments (front-office and central), in a
professional internship model with a duration of 6 and 12 months respectively. At the end of the programme, 13 young people were integrated into the bank's staff.
novobanco UP Programme - a programme for young university students with the duration of one month. In the 2021 edition, between July and September, a total of 92
participants attended this programme, taking the opportunity to have an approach to active life and paid professional experience during the summer.
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INTERNAL
MOBILITY
Internal mobility encourages the career development of each employee throughout their professional career. To this end one of the group's instruments is a programme that
enhances its human capital and enables its employees to embrace new challenges and opportunities for individual development and progress. In 2020, 113 employees decided to take
their professional path in hand, and of these 18 were given the opportunity to change their jobs. This contributed to the development of a more motivating work environment as well
as to retain talent.
Assessment covering all the employees is carried out through the Employee Portal (called “My Portal”), which includes a personal development programme where each employee can
define their objectives in terms of continuous improvement in the performance of their functions. Performance Assessment, carried out annually, focuses on two aspects:
1. fulfilment of objectives;
2. skills and behaviour observed (general, specific and technical).
It is an important tool in the alignment between the organisational strategy and the performance of each employee/team, supporting a constructive and continuous dialogue between
each Employee and his or her line manager.
“My Portal" is also available on the AppRH (human resources App), a new intuitive mobile tool that facilitates and speeds up the access to employees through their smartphone.
Being attentive to the knowledge and competencies that employees need at any given moment and promoting their continuous development, in order to guarantee the skills that are
essential for the achievement of the objectives that the Group has set to reach.
Providing training solutions that enhance the contribution of the employees, continuing to invest consistently in the design and adoption of distinctive and motivating training, enabling
the improvement of performances, and the development and evolution of novobanco's employees.
3
PERFORMANCE
ASSESSMENT
4
TRAINING
Training
In order to guarantee adequate training, in 2021 we invested around €754.2 thousand
and provided a total of 179.3 thousand hours of training, focusing in particular on five
areas of knowledge:
WE PROVIDED 14 ESG
TRAINING HOURS PER EMPLOYEE
• Training on the New Distribution Model
• Training on Sustainability
novobanco decided to transform its attention model, not only the visual aspect of its branch spaces,
but above all in the new way our employees receive and treat our clients. In 2021, 859 employees from
105 branches received 23,500 hours of on-site training on the new customer service choreography,
the new spaces, the new applications and the new equipment adopted.
• Legally Mandatory Training
This is the indispensable knowledge that all our professionals, each in their different jobs, must
have in order to perform their functions correctly. We provided 136,762 hours of e-learning training,
involving 4,100 employees. These training initiatives mainly focused on the Markets and Financial
Instruments Directive (MiFID II), the IDD - New Insurance and Reinsurance Distribution Law, the
Mortgage Credit Marketing Directive, the Prevention of Money Laundering and Terrorist Financing,
the General Data Protection Regulation, and Information Security.
In 2021, due to the strategic importance of the topic, it was decided to invest in training on
Sustainability in the financial sector, which covered 2.5 thousand employees, who completed a total
of 58.6 thousand hours of training.
• Training provided by the network of 17 School Branches and by the Human Capital Department
Team that coordinates the School Branch
At novobanco, on-the-job training is also provided by the network of 17 school branches distributed
throughout the country. Based on the concept of learning by doing, this is a pioneering project in
banking in Portugal, which over the course of 16 years has maintained its scope of action, and is
today responsible for the initial training of new employees who go into the retail commercial area, for
strengthening the skills of current employees, for the development of appropriate skills to sustain
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 functional mobility and for monitoring current employees returning from prolonged absences; 69
training programmes were carried out, totalling 2 thousand hours of training.
In 2021, the representation of the female gender in the management staff of Novobanco was 37.2%, a
slight decrease compared with 2020 that resulted from intra-group reorganisation moves.
As part of the project to implement novobanco’s New Distribution Model, the School Branch team
of the Human Capital Department, which coordinates the network of 17 branches mentioned above,
was responsible for training all our professionals who started using the Novobanco Automatic Tellers
(VTM) installed in the new branches. One thousand hours of on-site training were provided to 301
employees.
• Technological Training
IT and digital contents are increasingly relevant for organisations, requiring continuous skills updating
on the use of the organisation’s main IT tools and in the technological solutions adopted by the
entire business. In 2021 we provided 2.5 thousand hours of technological training to 114 employees.
In 2021 we provided an average of 42.8 hours of training per employee.
4.2.2 Gender equality, equal opportunities
and inclusion
Gender equality, equal opportunities and inclusion are all topics that remain on the novobanco Group
agenda. We continue to consolidate the bases for long-term sustainability, and therefore measures to
promote inclusion and equality remain strategic, with greater attention being paid to decision-making
and management positions.
In 2021, the following initiatives stand out:
• Subscription of the Target Gender Equality programme – with the aim of strengthening and
accelerating our journey towards gender equality in leadership.
• #Equal Gender Programme - quarterly monitoring of 3 gender equality indicators with a quarterly
report to the bank’s CEO.
• Internal Report on Gender Equality - gender-sensitive monitoring of several human capital
management processes (admissions, departures, performance assessment, distribution of each
functional group, professional training, use of benefits to conciliate personal and professional life,
among others).
• Active participation in the iGen Forum for Gender Equality – with the objective of promoting
gender balance, this is a forum for sharing successful practices that catalyse performance in order to
achieve the established goals.
• Participation in NOVA SBE’s Inclusive Community Forum - signature of a commitment to Inclusion,
addressing the lives of people with disabilities and aiming to promote a more inclusive community.
novobanco Gender Equality - (under-represented gender %)
First-line management
Management staff
Pay gap
2021
29.4%
37.2%
9.4%
2020
31.3%
38.2%
10.2%
21 vs20
-1.9.p.p.
-1.0 p.p.
- 1.3.p.p.
Given the importance of this topic, gender equality is part of the novobanco Social Dividend model, a
model of commitment to give back value to the community and the employees. The model comprises
four programmes, one of which, # Equal Gender, measures and sets targets for three indicators:
percentage of women in first-line positions, percentage of women in management positions and
gender pay gap.
Inclusion is one of the basic principles of human resources management at novobanco.
SOCIAL DIVIDEND - EQUAL GENDER
36.2%
36.1%
24.2%
9.4%
31.3%
9.6%
38.2%
31.3%
10.2%
37.2%
29.4%
9.4%
2018
2019
2020
2021
%Woman in leadership roles rate
%Woman in senior leadership roles rate
Pay Gap
2.5% of the bank’s staff are people with a certified disability or impairment, which is more than provided
for in Law No. 4/2019, which establishes the system of employment quotas for people with disabilities.
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 To address issues such as equality of gender and opportunities, diversity and respect for freedom of
association, as well as to repudiate forced and child labour, discrimination, any form of harassment
and, in general, to ensure respect for the employee as a person, the relationship of novobanco Group
with all its employees is based on two fundamental policies:
Human Rights Policy
Equality and Non-discrimination Policy;
Both policies were defined based on:
the United Nations Global Compact Principles;
the Universal Declaration of Human Rights;
The Guidelines of the Organization for Economic Cooperation and Development (OECD) for
Multinational Enterprises;
European and National Legislation on Gender Equality and Harassment prevention.
PROFESSIONAL CATEGORY BY GENDER (%)
Management
63.8%
Heads of
Department
55.7%
Specific
45.2%
Administrative
38.1%
36.2%
44.3%
54.8%
61.9%
Auxiliary
100.0%
Total
46.4%
53.6%
Men
Women
4.2.3 Work-life balance and Internal Social
Responsibility
At novobanco we believe that the balance between employees’ professional, personal and family life is
crucial to foster motivation, productivity, satisfaction, responsibility and a relationship of commitment
to the bank. On this basis, the management of our human capital is supported by instruments that aim
to enhance the employees’ well-being at all levels.
Integrated in the Social Dividend Model, the #Work & Life programme consists of a set of five measures
that, by promoting flexibility at work, improve the conciliation of work with the personal and family
life of our employees. This programme is also an instrument to attract and retain talent. Although the
Social Dividend Model was implemented within novobanco, gradually the measures of the Work&life
programme were extended to the companies of the novobanco group.
This support aims to strengthen the employees’ sense of belonging and pride in the group, their
personal satisfaction, as well as enabling savings in their monthly budget. These benefits, attributed
within the scope of the internal social responsibility programme, take the form of several initiatives.
Education support for children
of active employees
Special conditions on the commercial offer
Christmas presents for employees and their
children and dependent stepchildren
Specific pandemic-related support
These measures are the following:
By the end of 2021 we had allocated 830.7 thousand euros in support to 781 employees.
• Leave on special dates (Employee’s birthday; children’s birthday; 1st day of school of children in
compulsory school years).
• Purchase of holidays
• Home Office
• Early Friday or Late Monday
• TakeAway
In 2021, due to the lingering pandemic context, novobanco relaunched the package of special benefits
to tackle possible financial needs felt by families, in addition to access to loan moratoria that had already
been guaranteed. The bank also rewarded the employees who were on the front line in the response to
the pandemic emergency in 2020, granting 2 days of additional leave that they could take during the
year.
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 The employees, both active and retired, also have three canteens at their disposal where they can
have lunch and order take-away meals. These canteens serve low-cost nutritionally balanced meals,
with 3 to 4 options to choose from each day, each coming with a nutrient information sheet (nutrition
traffic light). In addition to providing free lunch, the aim is also to encourage the employees to make
responsible choices in terms of healthy eating. Awareness-raising initiatives sometimes also take place
in the canteen areas. Despite the significant increase in teleworking, the Bank maintained its canteens
and bars in full operation, and increased the take-away component, all in full compliance with the social
distancing and hygiene rules imposed under Covid-19. A home delivery service was also made available
for employees teleworking who lived close to two of the canteens.
4.2.4 Looking after the Safety, Health and Well-
being of our employees
The holistic well-being (physical, psychological and social, ...) of its employees is essential for the
development and success of the group’s activity, which to this end has in place a health and well-being
policy based on five lines of action:
1
2
3
4
5
Communicate and raise awareness: enhancing continuous and relevant
communication about the Bank's path and strategy, as well as providing contents
in various formats about health and well-being, encouraging employees to make
conscious and healthy choices.
Diagnose and prevent: risk situations in a timely manner, so as to act preventively.
Foster and promote: moments of focus on certain topics to increase employee
involvement and accelerate positive results.
Offer and provide: benefits aligned with best practices in healthy habits that
contribute positively to the holistic well-being of employees.
Reconcile and flexibilise: practices for a balance between professional, personal
and family life.
We are always attentive
As a result of the pandemic context, we created a new employee support package, with the following
benefits:
Possibility to bring forward the payment of 50% of the Christmas bonus,
Loans with special conditions to meet the needs for computer equipment and training,
Family coaching sessions and psychological support (free of charge).
During 2021, an attempt was always made to establish normality despite the pandemic context. The
activities that had been suspended were resumed and adjusted to this situation. The employees’
General and Family Medicine, Psychology, Psychiatry and Nutrition consultations alternated between
face-to-face and remote, according to the evolution of the pandemic and the employees’ preference.
The same occurred with occupational health consultations. The clinical posts that offer a set of services
in privileged conditions to the employees, both preventive and curative, were always in operation. In
terms of Occupational Medicine, there was a great additional focus on catching up the regular medical
examinations that had been suspended between April and August 2020 on the recommendation of
the General Health Directorate (DGS).
The well-being programme called “My B Side” (B for Bem-estar, or Well-being in
Portuguese) remained active in virtual format. This programme aims to provide
holistic well-being to employees, based on a set of initiatives that we call “well-
being experiences”, which address 8 dimensions: health, food, physical exercise,
emotional management, family and home, Interpersonal Relations, Personal
Image, and culture and leisure. A series of workshops, ateliers, conversations with
experts, and lectures on these themes were provided in virtual format.
In order to ensure an adequate response to the real needs of the employees, in early 2021 an evaluation
of Psychosocial Risks was carried out, which allowed identifying the impact of the pandemic at this level,
by comparison with the results obtained in the evaluation carried out in early 2020 (pre-pandemic).
There was a concern to align the topics covered in the “My Side B” Programme with that feedback and
with the pandemic context experienced, as well as to maintain the dynamics and periodicity of the
experiences, bringing the teleworking employees closer to the bank and thus offsetting the decrease
in personal interaction.
In the area of occupational safety, and considering the specific context of the pandemic, the group
conducted audits of its central buildings, which concentrate most of its employees, the canteens and
some branches, in order to check that the procedures and practices put in place in the context of the
Covid-19 pandemic were being followed. At the same time, the assessment of risks related to the
working condition and the functions performed was continued.
In this context, at the end of 2021, the employees were also consulted about the Health and Safety at
Work.
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 4.3 OUR SUPPLIERS
We select our suppliers with a responsible attitude and based on ESG criteria. The start of the
selection process is marked by our full availability to receive all presentations and proposals from
the most varied entities that wish to provide services or supply goods.
Shaping the future together.
The management of a sustainable business covers the entire value chain of novobanco Group, including
its suppliers. As a relevant buyer of products and services in the market, novobanco has set up a
supplier relationship model (around €188 million invoiced to novobanco in 2021)11, which is based on a
commitment to follow good practices and internationally agreed principles. This model, which is based
on the recognition of the importance of the economic, environmental and social impacts produced by
this group of stakeholders, is based on two main pillars:
1. Code of conduct, which determines that the process of supplier evaluation and selection is strict
and carried out in accordance with the highest standards of transparency and ethics;
2. The Supplier Relationship Principles are aligned with the OECD guidelines for multinational
companies and the United Nations Global Compact, setting the minimum requirements, not only for
suppliers but also for the Bank, with regard to business practices, health and safety at work, ethics
and environmental management. novobanco Group’s suppliers are invited to subscribe to these
principles, which imply the adoption of consistent conduct, namely with regard to the environment,
employment conditions and ethics.
The quality of the information collected through novobanco Group’s supplier portal permits to select
the best propositions, i.e., those from the suppliers best able to satisfy the needs and requirements
associated with the acquisition of goods/services. In 2021 the degree of suppliers’ coverage, in terms
of billing, that had completed their registration or were in the process of registering (pre-registered) in
the Portal was 91%.
For a more rigorous selection of this group of Stakeholders and based on the information provided,
novobanco calculates the “sustainability scoring”, which takes into account ethical, labour, hygiene
and safety at work, and environmental aspects. Around 22% of novobanco’s suppliers registered
in the Portal have a score of excellent and 84% have a positive score cumulatively, which is better
than in 2020. Maintaining a professional relationship with suppliers also implies responsible action,
namely guaranteeing and practising payment periods of 30 days, in line with good market practices.
This includes giving suppliers access to their current account, free of charge and at all times, simply
11 Recurrent suppliers to novobanco Group with annual turnover above 10 thousand euros.
Supplier Relationship Principles
Govern the selection of suppliers with:
Fairness - equal treatment, without privileges or cronyism, and always seeking to avoid conflicts
of interest;
Transparency and Ethics - adequate disclosure of information;
Quality and Efficiency - as criteria for selecting the best suppliers.
novobanco Group Supplier Portal
This is our privileged channel for the presentation and logging of current
and potential suppliers. In addition to providing the prime sourcing basis
for market consultation processes, the database of registered entities
allows for an easier and faster detection, assessment and comparison
of the suppliers' characteristics, technical skills and commercial
propositions.
SUSTAINABILITY SCORE
(%)
2.4%
13.4%
22.3%
28.7% ;
33.2%
Excellent
Good
Acceptable
Improving
Bad
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 by logging into the supplier’s account on the Supplier Portal. In 2021, given the persistence of the
Covid-19 context, the bank reduced its the payment period to suppliers to 20 days, from 22 days in
2020. Focusing on the national economy, the bank maintained its preference, whenever possible, for
national and local suppliers, and in 2021, 91% of our purchases were made from Portuguese suppliers
In 2021, the bank started to roll out its New Distribution Model, in which our aim was to change and
innovate, offering our current and new customers a totally differentiating and unique experience in the
financial sector, and transforming our branch network into spaces where the financial experience is not
limited to a simple visit to the bank.
85% OF THE NEW DISTRIBUTION MODEL
SUPPLIERS ARE PORTUGUESE
4.4 THE REDUCTION IN OUR
DIRECT ENVIRONMENTAL
IMPACT
We are reducing our environmental impact. The Covid-19 pandemic had a strong impact, with the
remote working of our central departments’ employees contributing significantly to this result.
But we want to maintain this trajectory, and therefore we are developing new measures that will
contribute to keep us on this path.
Shaping the future together.
The novobanco Group’s operations directly impact the environment. Therefore, one of the strategic
concerns for the group’s management is to find tools that enable the rational and adequate use of the
resources necessary for the development of its activity.
We recognise that employees working from home create waste and consume electricity, water and
paper that were previously consumed in the offices, and that this helped us to reduce our indirect
impact on the environment in 2021. But we are also aware that this situation will change, and despite
the fact that many employees of the central departments’ are still working remotely (home office),
we are assessing the various scenarios for a normal, or at least partial, return to the group’s central
buildings, considering initiatives to prevent negative impacts on the environment, and seeking to
maintain or improve our consumption, mainly of electricity and paper.
We have redefined our objectives for 2022-2024 and we will develop the necessary initiatives to
successfully achieve our goals.
We ended the year with 107 totally revamped branches, in which:
• We clearly promoted national products, and executed this project with national suppliers - 85% of
the suppliers were Portuguese companies with 100% national capital;
• We selected suppliers that could attest that they developed their business based on sustainability
criteria, proven by environmental certifications, and presenting a sustainability score of around 82%.
CONSUMPTIONS PER EMPLOYEE
60
45.0
10.1
4.6
2020
58
37.0
9.9
3.9
2021
Electricity consumption (thousand kwh)
Paper (Kg)
Water (m3)
CO2 Emissions (ton)
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 SCOPE 1 AND
2 EMISSIONS DECREASED
18.5%
WE EMITTED 2 599 TONNES LESS OF CO2
ELECTRICITY CONSUMPTION DECREASED
23.1%
WE CONSUMED 4.9 TONNES KWH LESS
OF ELECTRICITY
Reduced electricity consumption
Green electricity consumption (free of
CO2 emissions) at novobanco since
November 2021
Fewer emissions from traveling on
business trips by plane and company fleet.
The equipment and lighting used in the
New Distribution Model are energy
efficient.
Use of led lighting in practically all
installations
PHOTOCOPY PAPER CONSUMPTION
DECREASED
25.5%
WE CONSUMED 53 TONNES LESS
PHOTOCOPY PAPER
We fostered a "paperless" culture by
reinforcing dematerialisation processes,
namely formalisation with digital
signatures (Phygital project), and by
reducing printing in the various back-office
activities.
90% of the obligatory communications to
clients are digital. novobanco sends most
other banking documents to its clients in
digital format (account and credit card
statements, deposit certificates, account
entry notices, statements of securities
and investment funds’ portfolio
movements and positions, entry notices,
integrated billing notices, and sundry
notices).
WATER CONSUMPTION DECREASED
11.6%
WE CONSUMED 5.4 THOUSAND M3 LESS
WATER
Use of timer taps
Installation of water-flow reduction filters
WE SENT MORE PAPER AND CARDBOARD
FOR RECYCLING
9.7%
We recycled around 117.4 tonnes of paper
and 66.3 tonnes of cardboard
We sent 5.948 toners for recycling
(programme in partnership with Lexmark)
Since November 2021, novobanco is consuming green electricity, from renewable sources, in all its
buildings and branches where this option is available (more than 95% of its facilities), and this measure
has been certified by its electricity supplier.
This is one of the initiatives under the commitment to reduce scope 2 CO2, which proves the bank’s
real commitment in the transition to a low carbon economy and full alignment with its material SDG -
SDG13.
IN NOVEMBER 2021, NOVOBANCO STARTED
CONSUMING GREEN ELECTRICITY, FREE OF CO2
EMISSIONS
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 In 2020, novobanco started its Phygital project, whereby some of the business processes are being
dematerialised and formalised through a digital signature, thus contributing to a paperless organisation
with a paperless culture. In 2019 and 2020, the pilot years of the project, the bank saved 0.21 tonnes
of paper. In 2021, the first year of the phygital rollout, this project allowed the bank to avoid the
consumption of 13.5 tonnes of paper and 14 million litres of water otherwise used in its production. It is
the Bank’s expectation that by 2024 the Phygital project will have avoided a cumulative consumption
of around 147.4 tonnes of paper (minus 154.2 million litres of water per year).
4.5 COMMUNITY
WE AVOIDED THE CONSUMPTION OF 13.5 TONNES
OF PAPER WITH THE PHYIGITAL PROJECT
Concerns with social, cultural and financial literacy initiatives on behalf of the community have
always marked the group’s actions.
Over the years we have taken an active role in the community, which we want to be help thrive in a
sustainable and just way.
Under the slogan “The economy is all of us”, the bank once again put its experience and knowledge at
the service of the key players and decision-makers of the economic future of the country and shared
with its clients and society in general, specialised and technical information, which it considered could
support decision-making in the pandemic context and in the preparation for the post-Covid.
Shaping the future together.
novobanco is an active agent in the ecosystem to which it belongs, with a particular focus on “reviving
the economy” and supporting the communities it serves.
This support to the business fabric, and in particular to exporting companies, was evident in the
promotion of events such as “Portugal Exportador”, a meeting for sharing best exporting practices,
and also with the “Export and Internationalisation Awards”, which aim to recognise the best exporting
companies as well as the best internationalisation experiences of Portuguese companies.
Also noteworthy is the “Portugal que Faz” initiative which, in a partnership with Dinheiro Vivo (JN/ DN/
TSF), promoted 8 events throughout the year, in several regions of the country, with the representative
associations of each region and/or sector and local entrepreneurs, with the aim of discussing and finding
joint answers to the needs, challenges and opportunities of the different regions and of companies and
entrepreneurs in the post-pandemic.
WE ACHIEVED 210 POINTS OUT OF THE 200
POINTS SET AS A TARGET IN 2017
4.5.1 Social Dividend
In 2017 the bank designed a new Corporate Social Responsibility (CSR) programme and concept,
creating the Social Dividend assessment model, a reciprocity commitment assumed before society
and its employees. This model is a reference in the field, comprising four programmes with specific
objectives.
NB
EQUAL GENDER
NB
WORK & LIFE
NB
ENVIRONMENT
NB
SOCIAL RESPONSIBILITY
Aims to ensure a better gender balance, in line
with the customer base, the available talent
and a global meritocracy principle. Currently,
novobanco has already achieved gender
parity in the total number of employees.
Aims to reinforce practices that facilitate
conciliation between the demands of
professional life and the needs of
personal/family life, promoting employees'
well-being.
Aims to minimise the environmental impacts
resulting from its activity.
Aims to support the community through a
range of solutions to important issues in the
communities it serves.
128
1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 In the 5 years of monitoring of this model, several initiatives of the 4 programmes were very successful,
having exceeded their objectives. Positive highlights include: employee leaves on special days, half-
day leave - early Friday/late Monday, takeaway meals in the NB Work&Life programme, the growth of
digital communication with the clients, and the reduction of electricity and paper consumption under
the NB Environment programme.
DONATIONS/AREA OF INTERVENTION
(%)
6%
10%
WE GAVE BACK MORE THAN €1.6 MILLION
IN DONATIONS TO THE COMMUNITY
In 2021 and taking into account the current context, novobanco’s social responsibility programme was
developed in 4 pillars. Solidarity actions directly related to health were added, which once again sought
to make the best contribution to society in the current adverse pandemic context, and to cooperate
through various initiatives, with the highest sense of social responsibility.
4.5.2 Social and health patronage
Helping organisations that are active in social support in diverse areas such as fighting poverty, social
exclusion and health, among others, is the tagline of the novobanco Solidarity Programme.
novobanco assumes its responsibility in supporting the most destitute communities, whether the
needs are social, emotional or cultural, and regardless of their cause.
The bank works in partnership with social solidarity institutions with the aim of mitigating these
inequalities through various initiatives, among which the following stand out:
Social
Patronage
Cultural
Patronage
Educational
and research
Patronage
Patronage
for health
84%
Solidarity
Cultural patronage
Education and Investigation
Global Response to Covid-19
novobanco joined the initiative “Global Response to Covid-19”, with a donation of 500 thousand
euros to accelerate the development, production and equitable access to vaccines, diagnostics and
treatments for Covid-19. novobanco directed its donation to the WHO Foundation, an independent
global health foundation that collaborates directly with the World Health Organization. The bank’s
donations went towards the distribution of vaccines in developing countries.
All Together (“Todos Juntos”)
This initiative brought together 10 banks from the Portuguese financial system and more than 30
companies to support families in need. Under the motto #TodosJuntos (All Together), the initiative
raised more than 2.5 million euros to provide immediate help to the most vulnerable people and families
in the context of the crisis caused by the pandemic. The total amount raised allowed the purchase
of basic foodstuffs (milk, cereals, rice, olive oil, beans, pasta, tuna, etc.), with 20% going towards
supporting families’ medicine needs.
The distribution of goods was carried out by the Food Emergency Network, an initiative launched by
ENTRAJUDA, coordinated by the Food Banks and involving around 2,700 institutions and entities
throughout the country, ensuring a desirable diversity of beneficiaries and national distribution
(mainland and autonomous regions).
Collection of goods in the auditoriums of novobanco’s Masters Branches
For Christmas 2021, novobanco wanted to be closer to the community where it develops its activity.
Bringing together the solidarity of employees and clients in a single initiative, novobanco made its
Master branches from north to south of the country available to collect food, clothing and toys for 10
local Private Social Solidarity Institutions (IPSS) that are customers of novobanco.
novobanco employees’ Christmas Constellation
The Christmas festivities at novobanco Group start with the usual internal solidarity action. After a
selection process open to all employees, the initiative promoted by Make-a-Wish was selected. Under
the motto “let’s build the biggest Christmas constellation”, in six hours the employees donated the
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 necessary amount to fulfil the wish of a sick child or young person. The wave of internal solidarity, which
the Bank joined, made three wishes come true.
Quality of Life Action
novobanco was once again present in the Quality-of-Life Action of the Associação Salvador, an IPSS
that operates in the area of motor disability, which already has 14 editions. In 2021, 43 people with
reduced mobility (from a total of 75 applications received) were supported with a total amount of
approximately 130 thousand euros, in three categories - home works, training and employment, and
adapted sports equipment. novobanco is a patron of Associação Salvador and has been associated
with this project since its first edition, which over 14 years has supported more than 500 people with
reduced mobility with more than 1.5 million euros.
Acreditar
Novobanco annually finances one of the 12 rooms of the Acreditar Association’s home in Lisbon. The
Acreditar Association is an IPSS whose mission is to “treat children and young people with cancer
and not only the cancer in children and young people”, promoting their quality of life and that of their
families. By financing one of the rooms of the Lisbon home, referenced by the hospital Social Service,
we annually enable several children who have to leave their area of residence for oncological treatment
in Lisbon to live with their family.
The novobanco Photography Collection with about 1,000 emblematic works from all over the world,
by more than 300 artists from 38 nationalities, is one of the most important photography collections in
the world and the only corporate collection representing Portugal.
In 2021, the photography collection in partnership with the Faro Museum launched the exhibition
catalogue “Território Solar” (Solar Territory) with works from the collection. The Collection is represented
at the Nova SBE University campus in Carcavelos with an exhibition of works the artist Vik Muniz, who
portrays national personalities of international dimension such as José Saramago, Amália Rodrigues
and Cristiano Ronaldo.
In order to innovate and foster engagement with society and proximity with the clients and the local
communities all over the country, the bank developed a project in partnership with Valter Vinagre, a
renowned Portuguese artist included in the photography collection, to decorate 17 branches of the
commercial network with 31 reproductions of his photographic works, thus taking to its branch network
another dimension, the art of contemporary photography.
In 2021, as a founding member of the IACCCA International Association of Corporate Collections of
Contemporary Art, which brings together curators of more than 50 corporate collections from around
the world and represents more than 150,000 works of art, the bank’s photography collection joins
the project to develop the catalogue “Art in Time of Ecological Disruption”. Once again novobanco’s
photography collection stands out, ranking second in the number of works and texts selected to
integrate this catalogue, to be published in 2022.
4.5.3 Cultural Patronage
Even in the context of a pandemic, novobanco pursued its strategy of cultural patronage, namely
focusing on its novobanco Cultura programme, under which it lent works from its paintings collection
to various Museums. In 2021, the bank lent 16 works, increasing to 93 the number of its works now
on permanent exhibition in 36 Museums around the country. The bank also publishes in its platform a
road map to various regions and museums in the country, where the works of the novobanco Painting
Collection can be visited.
4.5.4 Educational Patronage
With the creation of the Financial Literacy Programme, novobanco assumes its role as an
institution that bases its positioning and management on principles of sustainability and
corporate citizenship, contributing to train a new generation of consumers of financial
services that is increasingly informed and has greater power of analysis and decision. In
this context, the bank’s financial literacy intervention is based on 4 pillars:
FINANCIAL LITERACY PROGRAMME
DIGITAL LITERACY PROGRAMME WITH THE
APB (PORTUGUESE BANKING ASSOCIATION)
PEDAGOGICAL PROCESS
PORTUGUESE MATHEMATICS OLYMPIADS
COMMERCIAL
OFFER
PERSONAL FINANCE
AND FAMILY BUDGET
Digital Financial Education Project of the
Portuguese Banking Association (APB) and its
members that promotes clarification sessions
on the basics of using the banks' digital
channels to carry out essential day‐to‐day
operations, aimed at the general public and
senior citizens.
Pedagogical project that appeals to the
quality of students’ reasoning, creativity and
imagination. One of the competition's
objectives is the early detection of scientific
vocations and, in particular, for Mathematics.
Adaptation of savings products to customers'
realities, with emphasis on savings products
tailored to each person’s unique family
budget.
Application that makes it easy to monitor and
manage the monthly budget at the touch of a
finger.
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 5.0
ESG PERFORMANCE
INDICATORS
5.1 Environment
5.2 Social
5.3 Governance
Rui Duarte
South Retail Department - Senior Business Client Manager
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1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 5.1 ENVIRONMENT
Environmental Indicators - Materials consumed
White paper
Internal use (tonnes)
Paper for Internal use (Kg/employee)
Forms - printing and finishing area (tonnes) 1
IT and electronic consumables
Toner cartridges (units)2
Ink cartridges (units)2
Bands (units)2
DVD/CDRom (units)2
Batteries
Environmental Indicators - Energy
Electricity consumption (kWh)
Total electricity consumption (GJ)
Electricity consumption (kWh/employee)
Diesel3
Generator diesel consumption (litres) 4
Generator diesel consumption (GJ)4
Vehicles diesel consumption (litres)
Vehicles diesel consumption (GJ)
Gasoline
Vehicles gasoline consumption (litres)
Vehicles gasoline consumption (GJ)
Total energy consumption (GJ)
Total energy consumption per employee (GJ)
Trips
Number of vehicles
Number of flights
1) novobanco
2) novobanco and novobanco dos Açores
3) Diesel consumption is an estimate based on the number of hours generators were operating
4) novobanco, Banco Best and GNBGA
2020
21 vs 20
2021
155.2
37.0
100.1
25
16
22.0
820
2 144
208.3
45.0
112.9
25
42
1 073.0
1 630
2 496
16 296 473.1
21 181 218.0
58 667.3
3 886.6
504.2
18.2
76 252.4
4 622.7
400.0
14.4
1 620 056.6
1 680 495.6
58 244.3
60 417.2
840.0
27.5
840.0
27.5
116 957.3
136 711.5
27.9
957
517
29.8
987
463
-25.5%
-18.6%
12.8%
0.0%
-61.9%
-97.9%
-49.7%
-14.1%
-23.1%
-23.1%
-15.9%
26.1%
26.1%
-3.6%
-3.6%
0.0%
0.0%
-14.4%
-6.5%
-3.0%
11.7%
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Environmental Indicators - Emissions (tCO2e)*
Direct emissions (Scope 1)
Emissions from trips in company cars
Emissions from emergency generators
Emissions from leaks of fluorinated gases **
Indirect emissions (Scope 2)***
Emissions from the production of electricity purchased (market-based method)
Emissions from the production of electricity purchased (Location based method)
Total (Scopes 1 and 2)
Indirect emissions (Scope 3)
Emissions from Employees’ business trips, including flights
Emissions from employees’ home/ work daily trips
Emissions from wastewater treatment
Emissions over the life cycle of the paper consumed
Emissions from the paper recycling process
Emissions from water consumption
Total (Scopes 1, 2 and 3)
*See methodological notes in GRI table.
** 2021 value not yet determined
***Scope 2 calculation by location-based method since 2018 only. The Total (A1+A2) was calculated using the Market-Based approach.
Environmental Indicators - Water consumption
Water consumption from public supply network (m3)
Water consumption per employee (m3/employee)
Environmental Indicators - Waste management
Paper sent for recycling (tonnes)
Cardboard sent for recycling (tonnes)
Total Paper and Cardboard
Toner cartridges sent for recycling (units)
Ink cartridges (units)
Bands (units)
DVD/CDRom (units)
Batteries
2021
4 313.1
4311.8
1.3
0
2 937.5
2 937.5
2 386.5
7 250.6
4 184.2
149.4
3 909.8
33.5
76.6
3.9
11.0
2020
4 888.3
4 472.6
1.1
406.6
4 490.3
4 490.3
3 757.9
9 370.5
4 663.2
186.6
4 323.1
41.2
96.4
3.6
12.4
11 434.8
14 033.8
2021
41 355.1
9.9
2020
46 772.6
10.2
2021
117.4
66.3
183.7
5 944
na
na
na
na
2020
106.1
61.3
167.4
8 322
na
na
na
na
21 vs 20
-11.6%
-3.6%
18.2%
-
-34.6%
-43.6%
-36.5%
-22.6%
-10.3%
-19.9%
-9.6%
-18.7%
-20.5%
-9.3%
-11.3%
-18.5 %
21 vs 20
-11.6%
-3.4%
21 vs 20
10.7%
8.1%
9.7%
-28.6%
-
-
-
-
Total IT and electronic consumables collected (units)
5 944
8 322
-28.6%
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Employees
Total
Men
Women
Employee distribution by gender and professional category
Total
Men
Women
Management
Total
Men
Weight in total male employees
Women
Weight in total female employees
< 30 years old
30 to 50 years old
> 50 years old
Heads of Department
Total
Men
Peso no total de colaboradores masculinos
Women
Weight in total female employees
< 30 years old
30 to 50 years old
> 50 years old
Specific
Total
Men
Peso no total de colaboradores masculinos
Women
Weight in total female employees
< 30 years old
30 to 50 years old
> 50 years old
2021
4 193
1 944
46.4%
2 249
53.6%
2021
4 193
1 944
2 249
472
301
7.2%
171
4.1%
2
292
178
461
257
6.1%
204
4.9%
0
346
115
1 973
891
21.2%
1 082
25.8%
111
1 459
403
2020
4 582
2 159
47.1%
2 423
52.9%
2020
4 582
2 159
2 423
472
299
6.5%
173
3.8%
2
322
148
513
291
6.4%
222
4.8%
0
387
126
2 176
985
21.5%
1 191
26.0%
122
1 658
396
21 vs 20
-8.5%
-10.0%
-0.7 p.p.
-7.2%
-0.7 p.p.
21 vs 20
-8.5%
-10.0%
-7.2%
0.0%
0.7%
0.7 p.p.
-1.2%
0.3 p.p.
0.0%
-9.3%
20.3%
-10.1%
-11.7%
-0.3 p.p.
-8.1%
0.1 p.p.
-
-10.6%
-8.7%
90.7%
-9.5%
-0.3 p.p.
-9.2%
-0.2 p.p.
-9.0%
-12.0%
1.8%
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Employee distribution by gender and professional category
2021
2020
21 vs 20
Administrative
Total
Men
Peso no total de colaboradores masculinos
Women
Weight in total female employees
< 30 years old
30 to 50 years old
> 50 years old
Auxiliary
Total
Men
Peso no total de colaboradores masculinos
Women
Weight in total female employees
< 30 years old
30 to 50 years old
> 50 years old
Employment contract
Total permanent workforce
Men
Women
Total Fixed-term Employees
Men
Women
Total
Men
Women
Staff Turnover (%)
Total
Men
Women
Age bracket
< 30 years old
30 to 50 years old
> 50 years old
1 279
487
11.6%
792
18.9%
61
831
387
8
8
0.2%
0
-
0
4
4
2021
4 153
1 929
2 224
40
15
25
4 193
1 944
2 249
2021
6.2%
3.5%
2.7%
1.1%
2.3%
2.8%
1 413
576
12.6%
837
18.3%
115
865
433
8
8
0.2%
0
-
0
4
4
2020
4 417
2 088
2 329
165
71
94
4 582
2 159
2 423
2020
7.3%
4.1%
3.2%
1.8%
3.2%
2.8%
-9.5%
-15.5%
-1.0 p.p.
-5.4%
0.6 p.p
-47.0%
-3.9%
-10.6%
0.0%
0.0%
0.0 p.p.
-
-
-
0.0%
0.0%
21 vs 20
-6.0%
-7.6%
-4.5%
-75.8%
-78.9%
-73.4%
-8.5%
-10.0%
-7.2%
21 vs 20
-0.9 p.p.
-0.6 p.p.
-0.5 p.p.
-0.7 .p.p.
-0.9 p.p.
0,0%
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Admissions and resignations
Admissions
Departures
Admissions
Departures
Admissions
Departures
2021
2020
20 vs 21
Total
Gender
Men
Women
Age bracket
< 30 years old
30 to 50 years old
> 50 years old
Training hours / employee
Total
Gender
Men
Women
Professional Category
Management
Men
Women
Heads of Department
Men
Women
Specific
Men
Women
Administrative
Men
Women
Auxiliary
Parental Leave
Employees who took parental leave
Employees who returned to work after parental leave ended
Employees who returned to work after parental leave ended and remained in service after 12 months.
Return to work rate
Retention rate after 12 months of work
66
39
27
27
34
5
455
254
201
68
156
231
192
98
94
135
53
4
479
276
203
28
202
249
-65.6%
-5.0%
-60.2%
-71.3%
-80.0%
-35.8%
25.0%
-8.0%
-1.0%
142.9%
-22.8%
-7.2%
2021
2020
20 vs 21
Total
Average per employee
Total
Average per employee
Total
Average per employee
-8.6%
-0.2%
179 294
79 999
99 295
9 372
5 838
3 534
9 914
5 436
4 478
94 958
43 078
51 880
65 049
25 647
39 403
0
42.8
41.2
44.2
19.9
19.4
20.7
21.5
21.2
22.0
48.1
48.3
47.9
50.9
52.7
49.8
0
196 958
89 359
107 600
9 297
5 690
3 607
8 217
4 758
3 460
99 218
46 210
53 008
80 226
32 701
47 525
0
2021
Men
39
39
Women
88
50
100.0%
56.8%
43.0
41.4
44.4
19.7
19.0
20.8
16.0
16.4
15.6
45.6
46.9
44.5
56.8
56.8
56.8
0
-10.5%
-7.7%
0.8%
2.6%
-2.0%
20.7%
14.2%
29.4%
-4.3%
-7%
-2.1%
-18.9%
-21.6%
-17.1%
-
-0.6%
-0.6%
0.8%
1.9%
-0.9%
34.3%
29.4%
40.8%
5.6%
3.1%
7.7%
-10.4%
-7.2%
-12.4%
-
Women
-32.3%
-41.2%
-
2020
20 vs 21
Men
82
82
74
100%
90.2%
Women
130
85
116
65.4%
89.3%
Men
-52.4%
-52.4%
-
0.0 p.p.
-8.6 p.p.
-
-
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Health Services
Occupational Health - Occupational Medicine
Medical Exams
General Practice Consultations
Curative Medicine consultations and prescriptions
Consultations in other medical specialities
Mental health consultations (psychology and psychiatry)
Nutrition Consultations
Nursing
Total procedures (treatments, vaccination, medication, ECG)
Risk Prevention and Control Programmes
Cardiovascular screening
Cancer screening
Vision screening
Executive Check-up (for senior executives)
Health and Safety Indicators
Work related accidents
Men
Women
Occupational diseases
Men
Women
Deaths
Men
Women
Accident rate
Men
Women
Lost days rate
Men
Women
Absenteeism rate
Men
Women
2021
2020
21 vs 20
3 007
7 597
11 952
928
383
1 508
8 345
9 444
751
348
99.4%
-9.0%
26.6%
23.6%
10.1%
6 772
5 760
17.6%
2 408
724
2 674
186
1 100
354
1 212
86
118.9%
104.5%
120.6%
116.3%
2021
2020
21 vs 20
27
10
17
-
-
-
0
0
0
3.8%
3.0%
4.6%
0.05%
0.04%
0.04%
3.2%
2.3%
3.9%
29
11
18
-
-
-
0
0
0
2.8%
2.8%
4.3%
0.05%
0.03%
0.07%
4.5%
2.7%
6.1%
-6.9%
-9.1%
-5.6%
-
-
-
-
-
-
1.0 p.p.
0.2 p.p.
0.3 p.p.
0.0 p.p.
0.01 p.p.
-0.03 p.p.
-1.3 p.p.
-0.4 p.p.
-2.2 p.p.
137
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Health and Safety Indicators
Training in occupational health and safety
No. health training hours
No. safety training hours
No. of hours of health awareness promotion
Number of safety audits to the premises
Number of ergonomic assessments
No. of expert identifications and risk assessment of activities (IPAR)
No. of thermal environment assessments
No. of indoor air quality assessments
No. of lighting assessments
Other (Work Accident Analysis)
Employee Benefits
Education support
Early childhood benefits
School grants
Support to children and youths with special needs
Christmas present
Support to retired employees
Expenses with senior residences, day-care centres, home support, medicines and other basic necessities.
Under the ACT (Collective wage agreement)
Residential mortgage loans
Acquisition of consumer goods
In portfolio:
Residential mortgage loans
Individual Loans
2021
2020
21 vs 20
29
520.5
2 938.0
107
2
150
1
0
0
6
50.0
1 292.1
1 085.0
155
2
110
1
1
6
13
-42.0%
-59.7%
170.8%
-31.0%
0.0%
36.4%
0.0%
-100.0%
-100.0%
-53.8%
2021
2020
21 vs 20
398
436
€454 382.08
€511 639.91
224
262
€164 119.40
€192 834.66
91
81
€87 440.00
€79 940.00
3 171
2 324
€126 840.00
€120 960.00
€124 720.00
€108 640.00
68
60
€15 799 862.00
€15 811 993.00
€2 033 351.04
€2 597 801.00
€260 419 116.70
€276 094 383.00
€11 436 868.20
€13 538 205.00
-8.7%
-11.2%
-14.5%
-14.9%
12.3%
9.4%
36.4%
4.9%
14.8%
13.3%
-0.1%
-21.7%
-5.7%
-15.5%
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5.3 GOVERNANCE
Gender Equality - (under-represented gender %)
Board of Directors and 1st line managers (under-represented gender)
Management staff
Pay gap
Ratio of women's total remuneration to men's total remuneration per employee category
Management
Heads of Department
Specific
Administrative
Auxiliary
Total
Sustainability scoring (%)
Suppliers that endorsed novobanco Group’s relationship principles and have a sustainability scoring (%)
2021
25.6%
36.2%
10.1%
0.88
0.97
0.90
0.90
0
0.78
2021
52%
2020
26.5%
36.7%
9.4%
0.87
0.95
0.89
0.89
0
0.76
21 vs 20
-0.9 p.p
-0.5 p.p.
-0.7 p.p.
1 p.p.
2 p.p.
1 p.p.
1 p.p.
-
2 p.p.
2020
41%
21 vs 20
11 p.p.
139
1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021
6.0
ABOUT
THIS REPORT
6.1 Methodological notes
6.2 GRI Table
6.3 Independent Limited Assurance Report
Sandra Catarino
Risk Department - Area Manager
140
1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 This report describes the manner in which the novobanco Group approaches sustainability in the
management of its activity, in its involvement with employees and clients, in carrying out sustainable
business and in ensuring responsible conduct. It also details the Group’s sustainability performance in
the last two years.
This report was drawn up in accordance with the Global Reporting Initiative (GRI) model, standard
option. The GRI table is available in the Bank’s website, at: NOVO BANCO/Institutional/Sustainability/
Sustainability Report. This report, which under the terms of Article 508-G of the Commercial Companies
Code constitutes the Non-Financial Statement of the novobanco Group, is also drawn up for compliance
with the legal requirements introduced by Decree-Law no. 89/2017, of 28 July.
performance, considering that the relevant indicators were reported in accordance with the GRI
sustainability reporting standards and with Decree-Law no. 89/2017, as can be seen on pages XX and
XX.
The 2021 Sustainability Report complements and details the information contained in the 2021 Annual
Report, providing evidence that sustainability is an integral part of the Bank’s strategy.
In order to continue to progress and improve its performance, NOVO BANCO takes into account the
concerns and suggestions of its stakeholders. To this end, any questions, comments or suggestions
may be sent to the following email address:
Ernst & Young, Audit & Associados, SROC, SA has provided independent assurance to this sustainability
sustentabilidade@novobanco.
6.1 METHODOLOGICAL NOTES
SOCIAL INDICATORS
Staff Turnover
New hires rate
Accident Rate
Absenteeism Rate
Return to Work Rate
((Number of admissions + departures/ 2) total employees)2
New hires in 2021/total number of employees in 2021
Number of accidents at work/Hours worked*1000000
Number of absences (without maternity / paternity leave)/Possible working hours*100
* Employees who returned to work after parental leave ended and remained in service after 12 months, based on the number of returns in 2021
Average training hours per gender
Total number of training hours per gender/Total number of employees in each gender
Average training hours per professional category
Total number of training hours per professional category/Total number of employees in each category
Remuneration ratio
Ratio of average base remuneration and average total remuneration of women to men by employee category - (women remuneration / men remuneration)*100
Social Dividend
#NB Equal Gender and #NB Work & Life
Amount reached in December 2021 - baseline value 2016/target set for 2020 - baseline value 2016
The methodology for the Home office, Early Friday/ Late Monday and purchase of holidays initiatives was changed in 20199. In the previous methodology, no account was taken of the employees who
used the initiatives, regardless of the year in which the benefit was used. From 2020 and with the new methodology only repetitions within the same year are excluded. This new calculation formula is
justified by the extended monitoring period of the indicators.
Branches located in low density areas.
Number of branches located in the 165 low-density municipalities identified by Deliberation 55/2015 of the Interministerial Commission for Coordination, Portugal 2020
Economic value distributed
ENVIRONMENTAL INDICATORS
Electricity
Generators diesel
Water
General and administrative expenses + Staff Costs+ Taxes + donations
Amount calculated directly from EDP records and billing
Diesel consumption in 2021 is an estimate based on the number of hours generators were operating.
Estimate based on real water consumption in 100% of the central buildings and 48% of the branches.
Social Dividend | NB Environment
Amount reached in December 2021 - baseline value 2016/target set for 2020 - baseline value 2016
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Energy
PCI diesel (road)
Density of diesel (generators)
PCI Propane gas (LPG) and Natural gas
Electricity
CO2 Emissions Scope 1
CO2 Emissions Scope 2
CO2 Emissions Scope 3
The following formula was used to calculate direct energy consumption (fuel consumption) in GJ: Fuel consumption (l) * PCIX * Density X/1000, using the following conversion factors:
42.8 GJ/t (Source: Order No. 17313/2008 (SGCIE)
0.84 (Source: DGEG 2017, data for 21-09-2019)
46.65 GJ/t (Source: APA 2013 - https://apambiente.pt/_zdata/DPAAC/CELE/tabela_PCI_FE_FO_2013.pdf)
conversion:1 kWh = 0.0036 GJ (Source: International Energy Agency and GRI)
It also takes into account the following emission factors and parameters used to calculate Greenhouse Gases (GHG) emissions:
The following formula was used to calculate direct energy consumption (fuel consumption) in GJ: Fuel consumption (l) * PCIX * Density X/1000, using the following conversion factors:
• PCI diesel (generators) - 43.07 GJ/ (Source: APA - Fuel density values to be used under the EU ETS)
• Density of diesel (generators) - 0.837 kg/l Source: APA - Fuel density values to be used under the EU ETS)
•
• Light vehicle, petrol, engine cubic capacity < 1 400 cm3 0.173 kg CO2e/km (Source: GHG Protocol: Emission Factors from Cross-Sector Tools, 2017)
• Light vehicle, petrol, engine cubic capacity 1 400 and < 2000 cm3 - 0.215 kg CO2e/km (Source: GHG Protocol: Emission Factors from Cross-Sector Tools, 2017)
• Light vehicle, petrol, engine cubic capacity ≥ 2000 cm3 - 0.299 kg CO2e/km (Source: GHG Protocol: Emission Factors from Cross-Sector Tools, 2017)
• Light vehicle, diesel, engine cubic capacity < 2 000 cm3 - 0.181 kg CO2e/km (Source: GHG Protocol: Emission Factors from Cross-Sector Tools, 2017)
• Light vehicle, diesel, engine cubic capacity ≥ 2 000 cm3 - 0.245 kg CO2e/km (Source: GHG Protocol: Emission Factors from Cross-Sector Tools, 2017)
• Hybrid vehicle - 0.144 kg CO2e/km (Source: APA - NIR 2020)
• Electric vehicle - 0.018 kg kg CO2e/km (consumption - 13.3 kW/100 km) (Source: APREN, 2020)
The following conversion factor was used to convert indirect electricity consumption to GJ: 1 kWh = 0.0036 GJ
Electricity consumption was calculated using the following formula: Emission = Consumption X * Emission factor (EF)X
It also takes into account the following emission factors and parameters used to calculate GHG emissions:
• Electricity production mainland - market based method - 0.134 kg CO2e/kWh (Source: EDP 2019 Sustainability Report)
• Electricity production mainland - location based method - 0.457 kg CO2e/kWh (Source: APREN, 2020 energy mix)
• Electricity production in Madeira - location and market-based methods - 0.487 kg CO2e/kWh (Source: EE Madeira 2019)
The calculation includes the emissions resulting from employees’ business trips and home/work/home (HWH) trips, using the following formula: Emission = Trip (km) X * EFX
It also takes into account the following emission factors and parameters used to calculate GHG emissions:
• Diesel vehicle - 0.210 kg CO2e/km (Source: APA - NIR 2020)
• Petrol vehicle - 0.209 kg CO2e/km (Source: APA - NIR 2020)
• LPG vehicle - 0.193 kg CO2e/km (Source: APA - NIR 2020)
• Hybrid vehicle - 0.144 kg CO2e/km (Source: APA - NIR 2020)
• Electric vehicle - 0.018 kg CO2e/km (consumption - 13.3 kW/100 km) (Source: APREN 2020)
• Bus - 0.102 kg CO2e/km (Source: DEFRA 2020; 1.420 kg CO2e/km (Source: STCP 2011) and 0.115 kg CO2e/km (Source: Carris 2019)
• Subway - 0.0467kg CO2e (Source: Metro Lisboa 2016) and km, 0.040 kg CO2e/km (Source: Metro do Porto 2018)
• Train - 0.0157 kg CO2e/km (Source: CP 2019) and 0.021 kg CO2e/km (Source: Fertagus 2013/2014)
• Ferry - 0.190 CO2e/km (Source: Transtejo+Soflusa, 2014)
• Motorcycle (petrol) - 0.133 kg CO2e/km (Source: APA - NIR 2020)
• Motorcycle (electric) - 0.012 kg kg CO2e/km (consumption - 9 kW/100 km) (Source: APREN 2020)
• Plane emission = Trip (Km) X * EFX * Takeoff factor * RFI2
•
• Plane, Domestic flight FE CO2 - 0.17147 kg CO2e/km (Source: GHG Protocol: Emission Factors from Cross-Sector Tools 2017)
• Plane, short-distance flight FE CO2 - 0.09700 kg CO2e/km (Source: GHG Protocol: Emission Factors from Cross-Sector Tools 2017)
• Plane, long-distance flight FE CO2 - 0.11319 kg CO2e/km (Source: GHG Protocol: Emission Factors from Cross-Sector Tools 2017)
• Plane, domestic flight FE CH4 - 0.0001 kg CO2e/km (Source: DEFRA 2020)
• Plane, short-distance flight FE CH4 - 0.00001 kg CO2e/km (Source: DEFRA 2020)
• Plane, long-distance flight FE CH4 - 0.00001 kg CO2e/km (Source: DEFRA 2020)
• Plane, domestic flight FE N2O - 0.00002 kg CO2e/km (Source: DEFRA 2020)
• Plane, short-distance flight FE N2O - 0.00076 kg CO2e/km (Source: DEFRA 2020)
• Plane, long-distance flight FE N2O - 0.00095 kg CO2e/km (Source: DEFRA 2020)
• Takeoff factor - 109% (Source: DEFRA/IPCC 1999)
• RFI - 1.9% (Source: DEFRA/IPCC 1999)
• The calculation of GHG emissions from wastewater treatment also takes into account the following emission factors and parameters: 0.0019 kgCH4/per day (8-hour working day; employees in-office
It also takes into account the following emission factors and parameters used to calculate GHG emissions:
workdays in 2020), with the following factors:
• Global Warming Potential (GWP) CO2 – 1
• GWP CH4 – 28
• GWP N2O- 265
• The calculation of emissions associated with paper consumption, treatment of paper sent for recycling and water consumption also considers the following emission factors:
• Paper life cycle - 0.3 t CO2e/t paper consumed (Source: CEPI - Key Statistics 2019)
• Paper recycling: - 0.0213 kg CO2e/ kg of paper sent for recycling (Source: DEFRA 2020)
• Water consumption - 0.265 kg CO2e/m3 of water collected (Source: EPAL 2017)
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Customer service
Global satisfaction
Confidence
Net Promoter Score
Very Satisfied Clients
The weight of customers very satisfied with the service is measured by the % of responses of 8 to 10 on a scale of 1 to 10
The weight of customers very satisfied with the Bank is measured by the % of responses of 8 to 10 on a scale of 1 to 10
The confidence index corresponds to the average of responses on a scale of 0 to 10, with the average being converted into an index of 0 to 100
The Net Promoter Score is calculated based on the recommendation intention, as the difference between the % of promoters and the % of detractors
The % of promoters corresponds to the % of responses of 9 to 10 on a scale of 0 to 10
The % of detractors corresponds to the % of responses of 0 to 6 on a scale of 0 to 10
The weight of very satisfied clients is measured by the % of responses of 8 to 10 on a scale of 1 to 10
Complaint rate per 1000 active clients
Number of existing complaints divided by the number of active clients, with active clients considered as those that used the Bank's service in the last 3 months.
6.2 GRI TABLE
GENERAL DISCLOSURES
ORGANISATIONAL PROFILE
Page in the Report
SDG
GC Principles
Omissions
Scope
102-1
Name of the organisation
AR- page 2
102-2
Main brands, products, and services
SR – pages 112-118
MR - pages 14-16; 25-29; 43-47.
Institutional website, product and corporate
102-3
Location of headquarters
AR - page 2.
102-4
Number of countries where the organisation operates, and the names of countries where it has
significant Operations and/or that are relevant to the topics covered in the report.
SR – page 94
The 2021 Sustainability Report covers the novobanco Group – novobanco, novobanco dos
Açores, Banco Best and GNBGA.
MR – pages 43-47.
FS – page 167.
102-5
Ownership and legal form
FS - page 167
102-6
Markets served:
• geographic locations where products and services are offered;
• sectors served;
•
types of customers and beneficiaries
SR – pages 112-118
MR - pages 14-16; 25-29; 43-47.
Institutional website, product and company
The 2021 Sustainability Report covers the novobanco Group scope (novobanco, novobanco
dos Açores, Banco Best and novobanco Gestão de Ativos Group), and the figures for the 2020
Sustainability Report were recalculated based on this scope. The information on employees
reported in this report has the same scope as the Annual Report, i.e., it covers permanent
employees, fixed-term contracts and employees on loan. The employees with the remaining
employment contracts - interns, temporary workers and service providers - totalling 48 in 2021
- represent 0.01% of the group’s total workforce.
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GENERAL DISCLOSURES
OMRANISATIONAL PROFILE
Page in the Report
SDG
GC Principles
Omissions
Scope
102-7
102-8
102-9
total number of employees;
total number of operations;
Scale of the oMRanisation:
•
•
• net sales;
•
•
total capitalisation broken down in terms of debt and equity;
quantity of products or services provided
SR –pages 94; 112-118; 119;134.
MR – pages - 13 and 22.
FS - page 162-163.
Total number of employees by employment contract (permanent and temporary), by gender
and region
SR - pages 119-122; 134-135.
MR - pages 13 and 23.
A description of the oMRanisation’s supply chain, including its main elements as they relate to
the oMRanisation’s activities, primary brands, products, and services
SR - page 125.
Bank institutional website.
8
6
102-10
Significant changes to the oMRanisation’s size, structure, owneSRhip, or supply chain during
reporting period
102-11
Precautionary Principle or approach
Increase in the Bank’s share capital to the amount of 6,054,907,314.00 Euros.
Increase of the Bank’s share capital to 6,054,907,314.00 euros.
Shareholder Structure
Nani Holdings S.G.P.S., S.A - 73.83%
Fundo de Resolução (Resolution Fund) - 24.61%
Directorate General for the Treasury and Finance - 1.56%
MR- page 65.
SR – pages 100-101.
MR – pages 14-16; 25-29; 43-47.
102-12
102-13
STRATEGY
102-14
A list of externally-developed economic, environmental and social charteSR, principles, or other
initiatives to which the oMRanisation subscribes, or which it endoSRes.
SR – pages 103; 128-130.
Bank institutional website.
A list of the main membeSRhips of industry or other associations, and national or international
advocacy oMRanizations
SR - pages 103;128-130.
Bank institutional website.
A statement from the most senior decision-maker of the oMRanisation (such as CEO, chair, or
equivalent senior position) about the relevance of sustainability to the oMRanisation and its
strategy for addressing sustainability.
AR - pages 5-6.
102-15
A description of key impacts, risks, and opportunities
ETHICS AND INTEGRITY
102-16
Values, principles, standards, and norms of behaviour.
102-17
A description of internal and external mechanisms for:
seeking advice about ethical and lawful behaviour, and oMRanisational integrity;
reporting concerns about unethical or unlawful behaviour, and oMRanisational integrity.
CORPORATE GOVERNANCE
SR – pages 100-102.
MR – pages 14-16; 25-29; 43-47; 57-63.
SR – pages 105-107.
MR – pages 12; 20-23; 65-79.
SR – pages 96-97; 107-123.
MR – pages 12; 20-23; 65-79.
Bank institutional website.
102-18
102-19
Governance structure of the oMRanization, including committees of the highest governance
body. Committees responsible for decision making on economic, environmental, and social
topics.
SR – pages 105-107.
MR – pages 12; 20-23; 65-79.
Bank institutional website.
Process for delegating authority for economic, environmental, and social topics from the
highest governance body to senior executives and other employees.
SR – 105-107.
102-20
Executive-level responsibility for economic, environmental, and social topics.
102-21
Consulting stakeholdeSR on economic, environmental, and social topics
102-22
Composition of the highest governance body and its committees
102-23
Whether the chair of the highest governance body is also an executive officer in the
oMRanisation. If the chair is also an executive officer, describe his or her function within the
oMRanisation’s management and the reasons for this arrangement.
Chairman of the Executive Board of Directors
SR – pages 105-107.
MR- pages 12; 20-23; 65-79.
Bank institutional website.
SR – pages 97-101.
Bank institutional website.
SR – pages 105-107.
MR- pages 12; 20-23; 65-79.
Bank institutional website.
SR – pages 105-107.
MR- pages 12; 20-23; 65-79.
Bank institutional website.
16
16
10
10
16
5, 16
16
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Omissions
Scope
GENERAL DISCLOSURES
Page in the Report
102-24
102-25
Nomination and selection processes for the highest governance body and its committees and
criteria used for nominating and selecting highest governance body membeSR-
MR- pages 12; 20-23; 65-79.
Institutional website.
Processes for the highest governance body to ensure conflicts of interest are avoided and
managed.
SR – page 107.
MR- pages 12; 20-22; 71.
Institutional website, Conflicts of Interest Polic.
102-26
Highest governance body’s and senior executives’ roles in the development, approval, and
updating of the oMRanisation’s purpose, value or mission statements, strategies, policies, and
goals related to economic, environmental, and social topics.
102-27
Measures taken to develop and enhance the highest governance body’s collective knowledge
of economic, environmental, and social topics.
102-28
Processes for evaluating the highest governance body’s performance with respect to
governance of economic, environmental, and social topics
The Chairman of the Executive Board of Directors and remaining members of the Executive
Board of Directors and General and Supervisory Board who are part of the Sustainability
Steering Committee, control and approve sustainability management on a monthly basis,
based on the objectives defined for 2024. These objectives are monitored through an action
plan and the coordination of teams appointed to implement both the E - pillar (ESG pillar) of
the bank’s strategy, and the Social Dividend model, with objectives defined for 2021, quarterly
assessed. The social dividend aims to give back to the bank’s employees and the community
in general what the bank generates with its activity. These models and respective procedures
ensure the alignment of sustainability performance across the Bank’s various operations,
through coordination of the initiatives with the officers appointed in each operation.
SR – pages 105-107.
MR- pages 12; 20-23; 65-79.
Institutional website, Conflicts of Interest Policy.
Sustainability issues are submitted to the Chairman of the Executive Board of Directors and
the members of the Executive Board of Directors who are part of the Sustainability Steering
Committee on a monthly basis and whenever justified.
SR – capítulo 3 Governance da sustentabilidade
MR - pages 12; 20-23; 65-79.
Institutional website, Conflicts of Interest Policy.
The performance assessment processes, with regard to the identification of risks
and opportunities in economic, social and environmental issues, are identified and managed by
the Executive Board of Directors, Committees, Departments and subsequently
submitted to the highest governance body and to the Chairman of the
Executive Board of Directors. For more information see
SR – pages 105-107.
MR - pages 12; 20-23; 65-79.
Institutional website.
102-29
102-30
102-31
102-32
Highest governance body’s role in identifying and managing economic, environmental,
and social topics and their impacts, risks, and opportunities – including its role in the
implementation of due diligence processes.
SR – pages 105-107.
MR – pages 65-79.
Highest governance body’s role in reviewing the effectiveness of the oMRanisation’s risk
management processes for economic, environmental, and social topics
SR – pages 105-107.
MR –pages 58-64; 65-79.
Frequency of the highest governance body’s review of economic, environmental, and social
topics and their impacts, risks, and opportunities
The Chairman of the Executive Board of Directors and the members of the Executive Board
of Directors who are part of the Sustainability Steering Committee review the bank’s
sustainability performance on a montgly basis, including the key risks and opportunities.
SR – pages 105-107.
MR – pages 65-79.
The highest committee or position that formally reviews and approves the oMRanisation’s
sustainability report and ensures that all material aspects are covered
The AR and the Sustainability Report are approved by the Executive Board of Directors and the
General and Supervisory Board.
102-33
Process for communicating critical concerns to the highest governance body.
SR – pages 105-107.
MR – pages 65-79.
102-34
Total number and nature of critical concerns that were communicated to the highest
governance body.
SR – pages 105-107.
MR – page 72.
Institutional website - supervision committees and Irregularities Reporting policy Institutional
website - supervision committees and Whistle-blowing Policy.
SDG
5, 16
16
4
16
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Page in the Report
SDG
GC Principles
Omissions
Scope
102-35
a. Remuneration policies for the highest governance body and senior executives for the
following types of remuneration:
- Fixed pay and variable pay, including:
• Performance-based pay
• Equity-based pay (shares or share options)
• Bonus
• Deferred or vested shares
• Sign-on bonuses or recruitment incentive payments
• Termination payments
• Clawbacks
• Retirement benefits, including the difference between benefit schemes and contribution
rates for the highest governance body, senior executives, and all other employees.
b. How performance criteria in the remuneration policies relate to the highest governance
body’s and senior executives’ objectives for economic, environmental, and social topics.
102-36
Process for determining remuneration.
StakeholdeSR’ opinions with regard to remuneration are requested and taken into account,
including through voting on remuneration policies and proposals, when applicable.
SR – pages 105-107.
MR – pages 74-79.
Institutional website, Remuneration Policies.
SR – pages 105-107.
MR – pages 74-79.
Institutional website, Remuneration Policies.
SR – pages 98-100; 103-105.
MR – pages 74-79.
Institutional website, Remuneration Policies.
102-37
102-38
102-39
Ratio of the annual total compensation for the oMRanisation’s highest-paid individual in each
country of significant operations to the median annual total compensation for all employees
(excluding the highest-paid individual) in the same country
Median annual total compensation for all employees (excluding the highest-paid individual); €34 634.5.
CEO total annual remuneration: €371 858.0 Change in CEO remuneration: 1.2%
Ratio of the CEO total annual compensation to the median annual total compensation for all employees
(excluding the highest-paid individual) 10.7%
Ratio of the peARentage increase in annual total compensation for the oMRanization’s
highest-paid individual in each country of significant operations to the median peARentage
increase in annual total compensation for all employees (excluding the highest-paid individual)
in the same country
The wage increase in 2021, as per the Collective wage agreement, was 0.2%.
Average remuneration: 3.7%
STAKEHOLDER INVOLVEMENT
102-40
102-41
102-42
102-43
102-44
List of stakeholder groups
SR – pages 97;103; 108-126; 129-130.
PeARentage of total employees covered by collective baMRaining agreements
SR – pages 97;103; 108-126; 129-130.
8
3
Identifying and selecting stakeholdeSR
Approach to stakeholder engagement
SR – pages 97;103; 108-126; 129-130.
SR – pages 97;103; 108-126; 129-130.
Key topics and concerns that have been raised through stakeholder engagement, including how
the oMRanization has responded to those key topics and concerns
SR – pages 97;103; 108-126; 129-130.
REPORTING PRACTICE
102-45
102-46
102-47
Entities included in the consolidated financial statements
Defining report content and topic boundaries
List of material topics
102-48
Restatements of information and reasons therefor
102-49
Changes in reporting
FS- pages 168-169.
SR - pages 97-99.
SR - pages 97-99.
The 2021 Sustainability Report details the performance over the last two years for the
novobanco Group scope, therefore the data presented in this report for 2020 were recalculated
for this scope.
The 2021 Sustainability Report details the performance over the last two years for the
novobanco Group scope, therefore the data presented in this report for 2020 were recalculated
for this scope.
Increase of the Bank’s share capital to 6,054,907,314.00 euros.
Shareholder Structure
Nani Holdings S.G.P.S., S.A - 73.83%
Fundo de Resolução (Resolution Fund) - 24.61%
Directorate General for the Treasury and Finance - 1.56%
MR- page 66.
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Reporting period
Date of most recent report
Reporting cycle
102-50
102-51
102-52
102-53
102-54
102-55
102-56
Page in the Report
1 January to 31 December 2021
2020
Annual
SDG
GC Principles
Omissions
Scope
Contact point for questions regarding the report
sustentabilidade@novobanco.pt
Claims of reporting in accordance with the GRI Standards
5 GRI content index
“Core option”
SR – pages 143-158.
A description of the oMRanisation’s policy and current practice with regard to seeking external
assurance for the report.
SR – pages 159.
8
3
ECONOMIC INDICATOSR
TOPIC: ECONOMIC PERFORMANCE
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
201-1
Direct economic value generated and distributed
201-2
Financial implications and other risks and opportunities due to climate change
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. This matrix forms the basis of the novobanco Group’s
sustainability strategy and its overall strategy, alongside the commitments and objectives
undertaken.
The Strategic Plan defined for the 2019-2021 three-year period, on which the management
approach has been based, was designed to put in place the necessary conditions for the
novobanco Group to transition from a restructuring bank into a growth bank prepared for the
future. To this end, the Bank is defining a new distribution model, streamlining its technological
and process infrastructure, rejuvenating and enhancing its human capital, and fine-tuning its
risk model, electing as cross-cutting priorities optimisation, digitisation and differentiation.
The novobanco Group has over the years promoted several initiatives with economic impacts.
The group’s activity has been shaped by and developed in accordance with the objectives
established in the Strategic Plan, which resulted in the growth of the recurrent credit portfolio,
with a reduction in the cost of risk, in significant improvements in commercial banking income,
and in the continuous reduction of operating costs, despite the strong increase in investment.
The Bank monitors the indicators defined for this topic on a monthly basis.
Banking Income: €: 855.9. million
MR – page 39.
Banking Income: €: 855.9 million
MR – page 39.
General and administrative expenses: €141.1 million
MR – page 87.
Staff Costs: €233.3 million
MR – page 87.
Payments to providers of Capital - Shareholders - There was no distribution of dividends.
Taxes: €12,7M million
MR – page 87.
Community Investments: €1.6 million in donations
SR – pages 129-130.
Economic Value Distributed: €388.7M million
Economic Value Retained €467.2M million
With regard to climate change, the novobanco Group offers its clients a number of
environmental products, namely the 18.31, NB 18.25 and NB 26.31 accounts, as well as ECO
and ESG structured products, ECO mortgage loans and ESG funds. It is also concerned with
dematerialising client communications and reducing the direct environmental impact of its
activity. The Bank has recently signed commitments concerning the decarbonisation of the
economy.
SR – pages 100-101; 112-118.
AR- pages 59-60.
2, 5, 8, 9
13
201-3
201-4
Defined benefit plan obligations and other retirement plans
SR – pages 119-124; 136-138.
Financial assistance received from governance
FS - pages 165 e 166.
TOPIC: MARKET PRESENCE
103-1
Explanation of the material topic and its Boundary
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The novobanco Group has defined its sustainability
policy and strategy based on this matrix, the SDGs, the commitments undertaken and the
national and international regulatory framework.
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Page in the Report
SDG
GC Principles
Omissions
Scope
103-2
The management approach and its components
103-3
Evaluation of the management approach
202-1
Ratios of standard entry level wage by gender compared to local minimum wage
202-2
Proportion of senior management hired from the local community
TOPIC: INDIRECT ECONOMIC IMPACTS
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
203-1
Infrastructure investments and services supported
203-2
Significant identified indirect economic impacts of the oMRanisation, including positive and
negative impacts
TOPIC: PROCUREMENT PRACTICES
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
204-1
PeARentage of the procurement budget used for significant locations of operation that is
spent on supplieSR local to that operation
TOPIC: ANTI-CORRUPTION
103-1
Explanation of the material topic and its Boundary
The Strategic Plan for the 2019-2021 three-year period, on which the management approach
has been based, was designed to put in place the necessary conditions for the novobanco
Group to transition from a restructuring bank into a growth bank prepared for the future. This
plan has now been restructured under the new title of “Making the Future”. Based on 9 pillars/
priorities, of which one is the ESG pillar, this plan will steer the group’s activity in a competitive
market until 2024. To this end, the Group is streamlining its technological infrastructure and
processes, rejuvenating and enhancing its human capital and adjusting its risk model, selecting
optimisation, digitisation and innovation as cross-cutting priorities.
The novobanco Group has over the years promoted several initiatives with economic impacts.
The group’s activity has been steered by the objectives established in the Strategic Plan,
translating into the growth of the recurrent credit portfolio, with a reduction in the cost of risk,
a significant improvement in commercial banking income, and
the continuous reduction of operating costs, despite the strong increase in investment. The
group monitors the indicators defined for this topic on a monthly basis.
For the professional categories that are representative of its workforce, novobanco pays a
minimum salary that is higher than the national minimum wage (the lowest salary paid by
novobanco is 1.33 times higher than the national minimum wage).
The group develops most of its activity in Portugal. Local hiring is an integral part of the Bank’s
hiring practices. Priority is always given to local employees, so as to build a sustained and
competent workforce, with possibilities for career advancement, moving on to leadership
positions. Consequently, management positions are mostly held by local employees and
non-local employees are few. At national level and taking into account senior management -
Executive Board of Directors -, employees of Portuguese nationality and women employees
represent 33.3% and 16.7% of the workforce.
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The novobanco Group has defined its sustainability
policy and strategy based on this matrix, the SDGs, the commitments undertaken and the
national and international regulatory framework.
The novobanco Group has over the years promoted several initiatives with indirect economic
impacts.
The novobanco Group monitors indicators pertaining to this topic and reports the results in its
Annual Report, institutional website and Sustainability Report.
5, 7, 8
8
6
6
SR - pages 109-118.
MR – pages 43-47.
SR - pages 109-118.
MR – pages 43-47.
2, 5, 7, 9, 11
1, 2, 3, 8, 10, 17
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The novobanco Group has defined its sustainability
policy and strategy based on this matrix, the SDGs, the commitments undertaken and the
national and international regulatory framework. Purchasing practices are considered material.
The novobanco Group has over the years promoted several initiatives in this area, having
namely implemented a sustainability scoring for the process of registration of suppliers in its
Supplier Portal.
SR – page 125-126.
The novobanco Group monitors indicators pertaining to this topic and reports the results in its
Annual Report, institutional website and Sustainability Report.
The novobanco Group acquires its regular consumption products, such as stationery,
equipment and specialised services for mainland Portugal and the Islands, from national
companies. Around 90.8% of the expenses refer to national suppliers vs 9.2% of international
suppliers.
SR – page 125-126.
12
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The novobanco Group has defined its sustainability
policy and strategy based on this matrix, the SDGs, the commitments undertaken and the
national and international regulatory framework, and anti-corruption is considered material.
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Page in the Report
SDG
GC Principles
Omissions
Scope
103-2
The management approach and its components
103-3
Evaluation of the management approach
205-1
Total number and peARentage of operations assessed for risks related to corruption
Communication and training about anti-corruption policies and procedures
205-2
205-3
The novobanco Group focuses on the prevention, detection, reporting and management of
situations involving risks of conduct or irregular conducts, based on principles of integrity,
honesty, diligence, competence, transparency and fairness.
The novobanco Group monitors indicators pertaining to this topic and reports the results in its
Annual Report, institutional website and Sustainability Report.
SR – pages 109-118.
MR – pages 43-47.
SR - page 95.
MR - page 73.
16
16
16
10
10
10
Confirmed incidents of corruption and actions taken
The novobanco Group was not aware of any cases of corruption in 2021.
TOPIC: ANTI-COMPETITIVE BEHAVIOUR
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The novobanco Group has defined its sustainability
policy and strategy based on this matrix, the SDGs, the commitments undertaken and the
national and international regulatory framework. Unfair competition is considered material.
novobanco has over the years participated in several initiatives in the area of sustainable
financing, in partnership with its peers. In 2019 the Bank signed the “Letter of Commitment
for Sustainable Finance in Portugal”, which aims to contribute to the promotion of sustainable
investment practices in the country, with the purpose of accelerating the process of transition
to a carbon neutral economy by 2050, in full partnership with its peers. The Bank also
participates in another two working groups on Sustainable Finance, promoted respectively
by the Portuguese Association of Banks and the Portuguese Association of Investment
and Pension Funds and Asset Management Firms. Within its new strategic plan, one of the
priorities is the partnerships pillar, which seeks to find added value and new relevant partners
for the development of value proposals in the financial sector. Thus, by finding value in partners
the Bank seeks to provide a global ecosystem response to its clients.
The Bank monitors indicators pertaining to this topic and reports the results in its Annual
Report, institutional website and Sustainability Report.
206-1
Number of legal actions pending or completed during the reporting period regarding anti-
competitive behaviour and violations of anti-trust and monopoly legislation in which the
oMRanisation has been identified as a participant.
There is no record of any legal action regarding anti-competitive behaviour and violations of
anti-trust and monopoly legislation involving the Bank in 2021.
16
ENVIRONMENTAL INDICATOSR
TOPIC: MATERIALS ENEMRY
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
301-1
Evaluation of the management approach
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The novobanco Group has defined its sustainability
policy and strategy based on this matrix, the SDGs, the commitments undertaken and the
national and international regulatory framework. The environment and considered a material
topic
novobanco has over the years promoted several initiatives aimed at reducing its direct
environmental impact. Some of these measures are included it is NB Environment programme,
which is integrated in its Social Dividend model.
The novobanco Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report and institutional website.
Materials used by weight or volume
SR – pages 126-128; 132-133.
8,12
7,8
TOPIC: ENEMRY WATER AND CO2 EMISSIONS
103-1
Explanation of the material topic and its Boundary
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The group is finalising its sustainability policy and
consequent sustainability strategy based on this matrix, the SDGs, the commitments, the
objectives undertaken and the national and international regulatory framework. Issues such as
the eco-efficiency of the Bank’s branches, buildings and operations, paper consumption and
other consumables, emissions and all items that impact the bank’s environmental footprint are
considered to be important. Energy consumption is the bank’s largest resource consumption,
along with paper and consequent CO2 emissions, and as such has been given special attention
by the group.
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Page in the Report
SDG
GC Principles
Omissions
Scope
The novobanco Group has over the years promoted several initiatives aimed at reducing
its direct environmental impact. Some of these measures are included it is NB Environment
programme, which is integrated in its Social Dividend model.
novobanco has promoted several initiatives that allow for the reduction of energy
consumption, and in particular electricity consumption.
Every year it compiles a CO2 emissions inventory, which in 2021 covered for the first time the
novobanco group. In 2019, within the scope of its commitment to reduce CO2 emissions, the
bank signed the ‘Business Ambition for 1.5ºC’ letter, a document recently issued by the United
Nations Global Compact. With this signature, the bank assumes its commitment to preserve
the planet and contribute to limit the temperature increase to 1.5ºC by 2050, and undertakes
to submit a scientific project to reduce the CO2 emissions resulting from its activity.
Given the scarcity of this resource, the group has over the years promoted several initiatives
aimed at reducing its direct environmental in terms of water consumption.
The novobanco Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report and institutional website.
SR – pages 126-128; 132-133.
SR – pages 126-128; 132-133.
SR – pages 126-128; 132-133.
103-2
The management approach and its components
Evaluation of the management approach
EneMRy consumption within the oMRanisation
EneMRy intensity
Reduction of eneMRy consumption
103-3
302-1
302-3
302-4
302-5
305-1
305-2
305-3
305-4
305-5
Reductions in eneMRy requirements of products and services
SR – pages 114, 126-128; 132-133.
Direct (Scope 1) GHG emissions
EneMRy indirect (Scope 2) GHG emissions
EneMRy indirect (Scope 3) GHG emissions
GHG emissions intensity
Reduction of GHG emissions
SR – pages 126-127; 133.
SR – pages 126-127; 133.
SR – pages 126-127; 133.
SR – pages 126-127; 133.
SR – pages 126-127; 133.
305-6
Emissions of ozone-depleting substances (ODS)
305-7
Nitrogen oxides (NOx), sulphur oxides (SOx), and other significant air emissions
TOPIC: ENVIRONMENTAL COMPLIANCE
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
There have been no recharges of gases with the potential to destroy the ozone layer since
2015, as these are prohibited under Regulation (EC) No. 1005/2009, on substances that
deplete the ozone layer. Moreover, novobanco had been gradually replacing equipment that
emit ozone-depleting gases, when such still exist.
SOx and NOx emissions linked to the group’s activity result from combustion associated with
transportation, emergency generators and boilers. However, due to the reduced expression
of these activities within the group’s typical activity, these emissions are immaterial and
therefore are not accounted for.
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The novobanco Group has defined its sustainability
policy and strategy based on this matrix, the SDGs, the commitments undertaken and the
national and international regulatory framework. Environmental compliance is a material issue.
The novobanco Group has over the years promoted several initiatives aimed at reducing
its environmental impact. Some of these measures are included in its # NB Environment
programme, which is integrated in its Social Dividend model.
The Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report.
7,8,12,13
7,8,12,13
7,8,12,13
7,8,12,13
3,12,13,14,15
3,12,13,14,15
3,12,13,14,15
13,14,15
13,14,15
3,12
7,8
8
8,9
8,9
7, 8
7, 8
7, 8
8
8, 9
7, 8
3,12,14,15
7, 8
307-1
Significant fines and non-monetary sanctions for non-compliance with environmental laws
and/or regulations
In 2021 there were no instances of non-compliance with environmental laws and/or
regulations, nor were any fines paid in connection therewith.
16
8
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Page in the Report
SDG
GC Principles
Omissions
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TOPIC: SUPPLIESR ENVIRONMENTAL ASSESSMENT
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
Evaluation of the management approach
103-3
308-1
308-2
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The group is finalising its sustainability policy and
consequent sustainability strategy based on this matrix, the SDGs, the commitments
undertaken and the goals established.
The novobanco Group has over the years promoted several initiatives to ensure a judicious
selection of its suppliers, based on the information provided. The group calculates the
suppliers’ ‘sustainability scoring’, which takes into account environmental, ethical, labour,
hygiene and safety in the workplace aspects of its suppliers.
The novobanco Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report and institutional website.
New supplieSR that were screened using environmental criteria
Negative environmental impacts in the supply chain and actions taken
SR – pages 125-126.
SR – pages 125-126.
TOPIC: EMPLOYMENT
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The novobanco Group has defined its sustainability
policy and strategy based on this matrix, the SDGs, the commitments undertaken and the
national and international regulatory framework. Employment is considered a material topic.
The novobanco Group has over the years promoted several initiatives concerning the
development of programmes that ensure human capital management focused on talent
acquisition and retention, the rejuvenation of teams and the unlocking of the potential of
the more experienced employees, using methodologies and programmes aimed at individual
development, a balance between professional and personal life, and the creation of a circle
of knowledge and sharing. The information on employees reported in this report has the
same scope as the Annual Report, i.e., it covers permanent employees, fixed-term contracts
and employees on loan. The employees with the remaining types of employment contracts,
totalling 48 in 2021, represent 0.01 of the group’s total workforce.
The novobanco Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report and institutional website.
401-1
401-2
401-3
Total number and rate of new employee hires during the reporting period, by age group, gender
and region.
SR – pages 135-136.
Benefits provided to full-time employees that are not provided to temporary or part-time
employees
The novobanco Group does not usually hire part-time employees, or only on an exceptional
basis. In this context, benefits are granted under equal circumstances to all the group’s
employees and subsidies are attributed based on the employee’s income. Trainees and
temporary workers are not entitled to these benefits and are not covered by the scope of this
report. Their representativeness within the group is very small:
Total number of employees that were entitled to parental leave, by gender and return to work
and retention rates of employees that took parental leave, by gender
SR – page 136.
5, 8
8
8
8
8
6
6
TOPIC: LABOUR/MANAGEMENT RELATIONS
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
402-1
Minimum notice periods regarding operational changes and whether the notice period and
provisions for consultation and negotiation are specified in collective agreements
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The novobanco Group has defined its sustainability
policy and strategy based on this matrix, the SDGs, the commitments undertaken and the
national and international regulatory framework. Labour relations are considered a material
issue.
The novobanco Group has over the years promoted several initiatives concerning the
development of programmes that ensure human capital management focused on talent
acquisition and retention, the rejuvenation of teams and the unlocking of the potential of
the more experienced employees, using methodologies and programmes aimed at individual
development, a balance between professional and personal life, and the creation of a circle of
knowledge and sharing.
The Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report and institutional website.
The novobanco Group informs its employees of any relevant facts pertaining to their career
management in accordance with the established notice periods, seeking compliance with
clause 27 of the Collective Wage Agreement, which stipulates that workplace transfers are
subject to an advance notice of at least 30 days.
5
3
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TOPIC: OCCUPATIONAL HEALTH AND SAFETY
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
Page in the Report
SDG
GC Principles
Omissions
Scope
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The group is finalising its sustainability policy and
consequent sustainability strategy based on this matrix, the SDGs, the commitments, the
objectives undertaken and the national and international regulatory framework. Occupational
health and safety are by the group as a material issue.
The physical, psychological and social wellbeing of its employees is essential for the group,
which to this end has in place a health and wellbeing policy based on five lines of action:
1. Communicate and raise awareness;
2. Diagnose and prevent:
3. Encourage and promote;
4. Offer and provide;
5. Reconcile and flexibilise: practices for a balance between professional, personal and family life.
The novobanco Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report and institutional website.
novobanco group has no formal safety committees, however it engages its employees in the
definition and implementation of safety practices and the prevention of occupational hazards.
The national legislation requires a minimum guarantee of hygiene, health and safety conditions.
The group goes beyond the requirements of the law, annually reporting its practices and results
in the management of hygiene, health and safety of all its employees.
403-1
403-2
PeARentage of workeSR whose work, or workplace, is controlled by the oMRanisation, that are
represented by formal joint management-worker health and safety committees.
Types of injury and rates of injury, occupational diseases, lost days, and absenteeism, and
number of work-related fatalities by gender
SR – page 137.
403-3
WorkeSR with high incidence or high risk of diseases related to their occupation
403-4
Health and safety topics covered in formal agreements with trade unions
TOPIC: TRAINING AND EDUCATION
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
The novobanco Group is not aware of a high incidence or high risk of work-related diseases
amongst its employees.
novobanco has entered into Company-level Agreements with all the trade unions represented
in the institution, which enshrine the obligations of Occupational Medicine and hygiene and
safety in the workplace. In addition to the legally mandatory consultations and exams, the
Bank has in place other measures.
SR –pages 123-124; 135-138.
The novobanco group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
group’s dialogue with its stakeholders. The group is finalising its sustainability policy and
consequent sustainability strategy based on this matrix, the SDGs, the commitments, the
objectives undertaken and the national and international regulatory framework. The group
considers the Capture and development of talent as a material topic, and consistently
invests in the design and implementation of distinctive and motivating training, enabling the
improvement of performances, and the development and evolution of its employees.
The group has over the years promoted several initiatives and programmes to ensure that
human capital management is focused on talent attraction and retention.
The novobanco Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report.
8
8
8
8
404-1
404-2
Average houSR of training that the oMRanisation’s employees have undertaken during the
reporting period, by gender and employee category
SR – pages 120-122;136.
Programmes for upgrading employee skills and transition
assistance programmes
SR – pages 120-122;136.
404-3
PeARentage of employees receiving regular performance and career development reviews
The Performance Management Model, based on the continuous management of employee
performance and development, is integrated in the Employee Portal, called “My Portal”. The
Performance Management Process covers all employees and includes a personal development
programme where each employee can define his or her objectives in terms of continuing
improvement in the performance of their functions. At the closing date of this report the 2022
performance assessment had not been concluded.
4, 5, 8
8
5, 8
6
6
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TOPIC: DIVESRITY AND EQUAL OPPORTUNITIES
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
Page in the Report
SDG
GC Principles
Omissions
Scope
The novobanco group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
group’s dialogue with its stakeholders. The Group is finalising its sustainability policy and
consequent sustainability strategy based on this matrix, the SDGs, the commitments, the
objectives undertaken and the national and international regulatory framework. The group
considers the issue of Diversity and gender equality as important.
novobanco has over the years promoted several initiatives within its #NB Equal Gender
programme, which monitors three indicators and aims to develop a fair and gender-equal
model, having for the purpose defined specific objectives for 2021.
The group monitors indicators pertaining to this topic and annually reports the results in its
website and Sustainability Report.
405-1
PeARentage of individuals within the oMRanisation’s governance bodies in each of the
following diveSRity categories: Gender, Age group, Other indicatoSR of diveSRity where
relevant (such as minority or vulnerable groups).
MR– pages 20-22.
405-2
Ratio of basic salary and remuneration of women to men for each employee category
TOPIC: NON-DISCRIMINATION
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
SR – pages 122, 139.
The novobanco Group calculates the ratio based on total rather than base remuneration as the
latter is linked to a level defined by the collective labour agreement (ACT).
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The group is finalising its sustainability policy and
consequent sustainability strategy based on this matrix, the SDGs, the commitments, the
objectives undertaken and the national and international regulatory framework. The group
considers the issue Gender Equality and Human Rights as important.
novobanco has over the years promoted several initiatives aimed at reducing discrimination
negative impacts, namely through its #NB Equal Gender programme, integrated in its Social
Dividend model.
novobanco has over the years promoted several initiatives within its #NB Equal Gender
programme, which monitors three indicators with the aim of making the bank fairer and more
gender-equal, having for the purpose defined specific objectives for 2021.
5, 8
5, 8, 10
6
6
406-1
Total number of incidents of discrimination and corrective actions taken
In 2021 no incidents or lawsuits came to the attention of the novobanco Group concerning
discrimination on grounds of race, colour, gender, religion, public opinion or social background.
5, 8, 16
6
TOPIC: FREEDOM OF ASSOCIATION AND COLLECTIVE BAMRAINING
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
407-1
Operations and supplieSR in which the right to freedom of association and collective
baMRaining may be at risk
TOPIC: CHILD LABOUR AND FOARED OR COMPULSORY LABOUR
103-1
Explanation of the material topic and its Boundary
At the novobanco Group, the majority of the employees is covered by collective bargaining
agreements and perform their activity in accordance with the obligations established therein.
The group has over the years promoted several initiatives viewing non-discrimination, and in
this context often meets with the Workers’ Committee and the Trade Unions.
The Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report.
In 2021, the group was not aware of any instances of non-compliance with laws or regulations
for breaches of the right to freedom of association and collective bargaining, or of the payment
of fines in connection thereof, within its value chain.
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
group’s dialogue with its stakeholders. The group is finalising its sustainability policy and
consequent sustainability strategy based on this matrix, the SDGs, the commitments, the
objectives undertaken and the national and international regulatory framework. The group
considers the issue Gender Equality and Human Rights as important.
3
153
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Page in the Report
SDG
GC Principles
Omissions
Scope
Operations and supplieSR at significant risk for incidents of child labour
During 2021 no instances came to the attention of novobanco Group concerning operations
and suppliers where the risk of child labour or forced or compulsory labour had been identified.
8, 16
5
103-2
The management approach and its components
Evaluation of the management approach
TOPIC: SECURITY PRACTICES
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
Evaluation of the management approach
TOPIC: RIGHTS OF INDIGENOUS PEOPLES
103-1
Explanation of the material topic and its Boundary
The management approach and its components
103-3
408-1
409-1
103-3
410-1
103-2
103-3
411-1
The novobanco group complies with the legislation, rules and regulations in force and develops
its activity in full compliance with its Equality and Non-Discrimination Policy and Human Rights
Policy, defined based on:
•
•
• The Guidelines of the Organization for Economic Cooperation and Development (OECD) for
the United Nations Global Compact Principles;
the Universal Declaration of Human Rights;
Multinational Enterprises;
the Core Conventions of the International Labour Organization (ILO).
•
novobanco’s Human Rights Policy reflects its endorsement of and commitment to the Global
Compact Principles. The compliance and audit functions and the mechanisms in place for the
anonymous reporting of irregularities minimise the risk of any such occurrences within the
Group’s operations and in connection to its employees.
The novobanco Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report and institutional.
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
group’s dialogue with its stakeholders. The group is finalising its sustainability policy and
consequent sustainability strategy based on this matrix, the SDGs, the commitments, the
objectives undertaken and the national and international regulatory framework. The group
considers the issue of Security as important.
The group has over the years promoted several initiatives in this area for compliance with the
legislation in force.
The novobanco Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report.
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
group’s dialogue with its stakeholders. The group is finalising its sustainability policy and
consequent sustainability strategy based on this matrix, the SDGs, the commitments, the
objectives undertaken and the national and international regulatory framework. The group
considers the issue of Human Rights as important.
The group does not promote initiatives in this regard as its activity is developed in urban or
urbanised areas.
Security peSRonnel trained in human rights policies or procedures
In 2021 the group did not provide training in human rights to its security personnel.
16
Evaluation of the management approach
Not applicable
Total number of identified incidents of violations involving the rights of indigenous peoples
during the reporting period and remediation action taken
The group’s operations are located in urban or urbanised areas, therefore there are no instances
of violation of the rights of indigenous people.
2
TOPIC: HUMAN RIGHTS ASSESSMENT
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
group’s dialogue with its stakeholders. The group is finalising its sustainability policy and
consequent sustainability strategy based on this matrix, the SDGs, the commitments, the
objectives undertaken and the national and international regulatory framework. The group
considers the issue of Human Rights as important.
The Group has over the years promoted several initiatives aimed at reducing negative
impacts arising from Human Rights issues, namely through its #NB Equal Gender programme,
integrated in its Social Dividend model. The development of a culture of respect for human
beings is part of novobanco Group’s standards of excellence: respect for employees, respect in
the manner we deal with clients, suppliers and other stakeholders, respect in the relationships
established with the communities in the locations where the group operates. The group has a
Human Rights policy that can be consulted on its institutional website.
The novobanco Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report and institutional website.
412-1
Total number and peARentage of operations that have been subject to human rights reviews or
impact assessments
Not applicable
1
1
1
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Page in the Report
SDG
GC Principles
Omissions
Scope
412-2
Employee training on human rights policies or procedures
In 2021 novobanco Group did not provide any type of training on this topic.
412-3
Significant investment agreements and contracts that include human rights clauses or that
underwent human rights screening
TOPIC: LOCAL COMMUNITIES
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
All novobanco Group’s suppliers are covered by its Principles for Suppliers, which require
compliance with Human Rights obligations. These criteria are included in the agreements
entered into with all suppliers (100%). The certification of suppliers requires answering
mandatory response questions concerning human rights policies and practices. The Bank
visits all its material suppliers to check their supply capabilities and their compliance with the
requirements of the Principles for Suppliers. In 2021 the group found no instance of non-
compliance with these principles by its material Suppliers, namely through its regular visits
to their facilities. Should any cases of violation of human rights occur, the group undertakes
to investigate them and reserves the right to terminate the agreement with the Supplier in
question if it finds evidence of non-compliance with Human Rights obligations.
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
group’s dialogue with its stakeholders. The group is finalising its sustainability policy and
consequent sustainability strategy based on this matrix, the SDGs, the commitments, the
objectives undertaken and the national and international regulatory framework. The group
considers the issue of investment in the community as important.
novobanco Group has over the years promoted several initiatives under its Corporate Social
Responsibility programme, which aims to help devise solutions for important issues within the
community in which the Bank operates. This programme is deployed based on three pillars,
namely: culture, financial literacy and solidarity. Some of the initiatives under these pillars are
an integral part of the NB Social Responsibility programme, included within novobanco’s Social
Dividend Model.
The novobanco Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report and institutional website.
413-1
Operations with local community engagement, impact assessments, and development
programmes
SR – pages 103; 128-130.
413-2
Operations with significant actual and potential negative impacts on local communities
The novobanco Group is not aware of any operations having negative impacts on local
communities.
1, 2
TOPIC: SUPPLIESR SOCIAL ASSESSMENT
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
Evaluation of the management approach
103-3
414-1
414-2
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The group is finalising its sustainability policy and
consequent sustainability strategy based on this matrix, the SDGs, the commitments, the
objectives undertaken and the national and international regulatory framework. The issues
related to suppliers are considered as material.
novobanco Group has over the years promoted several initiatives addressing its value
chain, namely endorsing the Principles of Relationship with Suppliers, and calculating the
“sustainability scoring”, which takes into account environmental, ethical, labour, hygiene and
safety in the workplace aspects of its suppliers.
The Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report and institutional website.
New supplieSR that were screened using social criteria
SR – pages 125-126.
Negative social impacts in the supply chain and actions taken
In 2021 novobanco was not aware of any negative impacts at this level.
5, 16
5, 16
TOPIC: PUBLIC POLICY
103-1
Explanation of the material topic and its Boundary
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the Group’s
dialogue with its stakeholders. The Group is finalising its sustainability policy and consequent
sustainability strategy based on this matrix, the SDGs, the commitments, the objectives
undertaken and the national and international regulatory framework. The group considers the
issues Business Ethics and relations with stakeholders as important.
103-2
103-3
The management approach and its components
The novobanco Group manages its activity in full compliance with the legislation in force.
Evaluation of the management approach
Novobanco monitors indicators pertaining to this topic and reports the results in its
Sustainability Report.
1
2
1
1
2
2
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415-1
Political contributions
TOPIC: CUSTOMER HEALTH AND SAFETY
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
416-1
Assessment of the health and safety impacts of product and service categories
Page in the Report
SDG
GC Principles
Omissions
Scope
Political contributions by companies are not permitted under Decree Law No. 19/2003, of 20
June, and novobanco Group complies with these provisions.
16
10
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The group is finalising its sustainability policy and
consequent sustainability strategy based on this matrix, the SDGs, the commitments, the
objectives undertaken and the national and international regulatory framework. The group
considers the topic Security of the financial assets, and physical and digital security of the
client as material.
The group has over the years promoted several initiatives across all client security activities,
namely with respect to the clients’ safety, the security of transactions, and the safeguard of
the personal data of clients and other data subjects.
The novobanco Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report.
The group’s facilities comply with all existing rules for secure and private customer service.
The group conducts its relationship with clients in accordance with the new General Data
Protection Regulation, guaranteeing privacy and security in the treatment of customer data.
More information may be found in Indicator 418-1.
416-2
Total number of incidents of non-compliance concerning the health and safety impacts of
products and services
In 2021, there were no sanctions and/or fines imposed on novobanco Group in connection to
the General Data Protection Regulation (GDPR).
16
TOPIC: LABELLING OF PRODUCTS AND SERVICES
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The group is finalising its sustainability policy and
consequent sustainability strategy based on this matrix, the SDGs, the commitments, the
objectives undertaken and the national and international regulatory framework. The group
considers customer satisfaction and service quality, and financial products and services as a
material topic.
novobanco Group has over the years promoted several initiatives aimed at providing clear and
transparent information about the products and services it provides to its clients. Products
disclosure is subject to prior approval by the competent supervision authority.
The Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report and institutional website.
The group provides clear information about each product or service offered, including about
their characteristics and specific conditions. This information and underlying processes are
subject to strict internal controls in terms of the Bank’s internal audit and quality control, as
well as strict external controls, through the supervision conducted by the Bank of Portugal, the
CMVM and the external audits to the Bank’s processes.
417-1
417-2
417-3
Requirements for product and service information and labelling and peARentage of significant
product or service categories covered by and assessed for compliance with such procedures.
Total number of incidents of non-compliance with regulations and/or voluntary codes
concerning product and service information and labelling, by type of result
In 2021 no incidents of non-compliance with voluntary procedures and voluntary codes
concerning product and service information or labelling of novobanco Group were identified.
Total number of incidents of non-compliance with regulations and/or voluntary codes
concerning marketing communications, including advertising, promotion, and sponsoSRhip, by
type of result
In 2021 no incidents of non-compliance with voluntary procedures and voluntary codes on
marketing communications, including advertising, promotion, and sponsorship by novobanco
Group, were identified.
TOPIC: CUSTOMER PRIVACY
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The group is finalising its sustainability policy and
consequent sustainability strategy based on this matrix, the SDGs, the commitments, the
objectives undertaken and the national and international regulatory framework. The topic of
customer privacy is considered material.
novobanco Group has over the years promoted several initiatives to ensure it performs its
activity in accordance with best market practices and the legal and regulatory requirements.
The Bank ensures the confidentiality, integrity and availability of the information.
The novobanco Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report.
12, 16
16
156
1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 GENERAL DISCLOSURES
Page in the Report
SDG
GC Principles
Omissions
Scope
418-1
Total number of substantiated complaints received concerning breaches of customer privacy
In 2021, there were no sanctions and/or fines imposed on the group in connection to the
General Data Protection Regulation (GDPR).
12
TOPIC: SOCIOECONOMIC COMPLIANCE
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The group is finalising its sustainability policy and
consequent sustainability strategy based on this matrix, the SDGs, the commitments, the
objectives undertaken and the national and international regulatory framework. The topic
Business ethics and stakeholder relations is considered as material.
novobanco Group has over the years promoted several initiatives to ensure it performs its
activity in accordance with best market practices and the legal and regulatory requirements.
The novobanco Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report.
419-1
Significant fines and non-monetary sanctions for non-compliance with laws and/or regulations
in the social and economic area
The novobanco Group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report.
16
FINANCIAL SUPPLEMENT INDICATOSR
TOPIC: PORTFOLIO OF PRODUCTS
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
The novobanco Group’s materiality matrix and the SDGs endorsed comprise the sustainability
issues considered material in the development of its business, identified as a result of the
Group’s dialogue with its stakeholders. The group is finalising its sustainability policy and
consequent sustainability strategy based on this matrix, the SDGs, the commitments, the
objectives undertaken and the national and international regulatory framework. The themes of
Customer Satisfaction and Quality of Service, as well as Social and Environmental Products are
considered to be material.
The novobanco Group been enhancing its customer experience monitoring model with a view
to offering the best experience to its clients. Knowing the clients’ expectations throughout
their life cycle permits to identify opportunities for improvement, using a robust model
for monitoring the customer experience based on several action pillars. The Bank has also
reinforced its offering and services based on environmental criteria.
The group monitors indicators pertaining to this topic and reports the results in its
Sustainability Report and institutional website.
Policies with specific environmental and social components applied to business lines.
Procedures for assessing and screening environmental and social risks in business lines.
SR – pages 106-107.
MR- pages 59-60.
SR – pages 99-102.
MR- pages 59-60.
Management
Approach
Processes for monitoring clients’ implementation of and compliance with environmental and
social requirements included in agreements or transactions.
The novobanco Group has in place several mechanisms to regulate customer monitoring.
In cases which may be considered more sensitive, prevention and monitoring plans are
negotiated, and the situations are monitored, resorting, when necessary, to external experts.
Process(es) for improving staff competency to implement the environmental and social policies
and procedures as applied to business lines
The novobanco Group provides adequate training to its employees on the marketing of
products with environmental and social concerns.
Interactions with clients/investees/business partneSR regarding environmental and social risks
and opportunities
SR – pages 109-126;128-130.
PeARentage of the portfolio for business lines by specific region, size (e.g., micro/SME/ laMRe)
and by sector
SR – pages 110-112.
MR – pages 25-30; 43-47.
Monetary value of products and services designed to deliver a specific social benefit for each
business line broken down by purpose
SR – pages 112-118.
Monetary value of products and services designed to deliver a specific environmental benefit
for each business line broken down by purpose
SR – pages 112-118.
FS6
FS7
FS8
TOPIC: AUDIT
10
10
10
10
1, 8, 9
1, 8, 9, 10, 11
FS9
Coverage and frequency of audits to assess implementation of environmental and social
policies and risk assessment procedures
No audits strictly dedicated to the implementation of environmental and social policies are
carried out. The group annually assesses the practices implemented and the quantitative data
through an external independent verification of its AR and Sustainability Report.
10
157
1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 GENERAL DISCLOSURES
TOPIC: ACTIVE OWNESRHIP
Page in the Report
SDG
GC Principles
Omissions
Scope
FS10
FS11
FS12
PeARentage and number of companies held in the institution’s portfolio with which the
reporting organisation has interacted on environmental or social issues
AR- paginas 59-60
PeARentage of assets subject to positive and negative environmental or social screening
AR- paginas 59-60
Voting policy(ies) applied to environmental or social issues for shares over which the reporting
organisation holds the right to vote shares or advises on voting
novobanco Group’s equity holdings in other companies are always aimed at obtaining
profitability in the long term. Having said that, the Bank’s stance as a shareholder takes
into account the relevant principles to ensure consistent ethical, social and environmental
management.
TOPIC: LOCAL COMMUNITIES
FS13
Access points in low-populated or economically disadvantaged areas by type
FS14
Initiatives to improve access to financial services for disadvantaged people
TOPIC: LABELLING OF PRODUCTS AND SERVICES
FS15
Policies for the fair design and sale of financial products and services
SR – page 95.
Despite the downsizing carried out, the group still has a large network of branches across the
country. The group has been investing in the digitisation of its services, which has permitted
greater coverage and easier contact with its clients, wherever they may be.
Under its new distribution model, the group has been increasing the number of access
ramps and lifting platforms in its branch network. It also provides lowered ATMs with Braille
keyboards. his equipment is being installed if and when necessary, as the branch network is
refurbished. The aim is to gradually extend these access improvements to all novobanco’s
branches and services.
SR – pages 114-115.
All the financial products and services are designed in compliance with the legal requirements,
the regulators’ guidelines and the policies of the institution. novobanco Group regularly reports
to its regulators proof of its respect for and compliance with politics and rules of conduct,
externally and internally. The internal and external audits to the group’s procedures verify
whether its procedures comply with the requirements issued by the Bank of Portugal and the
Portuguese Insurance Institute.
FS16
Initiatives to enhance financial literacy by type of beneficiary
SR – pages 114-115; 130.
Bank institutional website.
10
10
1, 10
1, 10
10
1, 8, 10
AR
MR
SR
FS
Annual Report
Management Report
Sustainability Report
Financial Statements and Final Notes
novobanco Group
novobanco Group (novobanco, novobanco dos Açores, Banco Best and GNBGA)
novobanco
158
1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 6.3 INDEPENDENT LIMITED ASSURANCE REPORT
Ernst & Young
Audit & Associados - SROC, S.A.
Avenida da República, 90-6º
1600-206 Lisboa
Portugal
Tel: +351 217 912 000
Fax: +351 217 957 586
www.ey.com
(Translation from the original document in the Portuguese language. In case of doubt, the Portuguese
version prevails)
Independent Limited Assurance Report of the Sustainability Report
To the Board of Directors of
Novo Banco, S.A.
Introduction
1.
We have been engaged by the Board of Directors of Novo Banco, S.A. (the Group) to proceed with the
independent review of the “Sustainability Report 2021”, hereinafter the “Sustainability Report”, included
in the “Annual Report 2021” relating to the sustainability performance from 1 January to 31 December
2021.
Responsibilities
2.
3.
The Board of Directors is responsible for preparing the Sustainability Report and to maintain an appropriate
internal control system that allows the information presented to be free of material misstatements due to
fraud or error.
It is our responsibility to issue a limited assurance report, professional and independent, based on the
procedures performed and described in the “Scope” section below.
Scope
4.
5.
Our review procedures have been planned and executed in accordance with the International Standard on
Assurance Engagements (ISAE 3000, Revised) – “Assurance engagements other than Audits and Reviews
of Historical Financial Information”, for a limited level of assurance.
The procedures performed in a limited assurance engagement vary in timing and nature from, and are less
in extent than for, a reasonable assurance engagement. Therefore, the assurance provided by these
procedures is lower than the assurance that would have been obtained had a reasonable assurance
engagement been performed. Our independent review procedures comprised the following:
► Conducting interviews with Management, in order to understand how the information system is
structured and assess their level of knowledge of the topics addressed in the report;
► Review of the processes, criteria and systems adopted to collect, consolidate, report and validate the
data for the year 2021;
► Analytical review, on a sample basis, of the data calculated by Management, and verification of
quantitative and qualitative information disclosed in the report;
► Confirmation on how collection, consolidation, validation and report procedures are being implemented
in selected operating units; and
► Verification of the conformity of the information included in the Sustainability Report with the results of
our work.
6.
Regarding sustainability reporting standards of the Global Reporting Initiative – GRI Standards, we
performed a review of the self-evaluation made by Management of the adopted option to apply the GRI
Standards and conformity with Article 508-G of the Portuguese Companies Act (Código das Sociedades
Comerciais) (disclose of non-financial information).
Sociedade Anónima - Capital Social 1.335.000 euros - Inscrição n.º 178 na Ordem dos Revisores Oficiais de Contas - Inscrição N.º 20161480 na Comissão do Mercado de Valores Mobiliários
Contribuinte N.º 505 988 283 - C. R. Comercial de Lisboa sob o mesmo número
A member firm of Ernst & Young Global Limited
Novo Banco, S.A.
Independent Limited Assurance Report of the Sustainability Report
(Translation from the original document in Portuguese language.
In case of doubt, the Portuguese version prevails)
1 of January 2021 to 31 of December 2021
Quality and independence
7.
Our firm applies International Standard on Quality Control 1 (ISQC 1), and consequently maintains a global
quality control system which includes documented policies and procedures relating to compliance with
ethical requirements, professional standards, and the legal and regulatory provisions applicable and we
comply with the independence and ethical requirements of the International Ethics Standards Board for
Accountants (IESBA) Code of Ethics and the Code of Ethics of the Order of Chartered Accountants (OROC).
Conclusion
8.
Based on our work and evidence obtained, nothing has come to our attention that causes us to believe that
the information disclosed in the Sustainability Report, for the year ended 31 December 2021, is not free
from relevant material misstatements. Additionally, nothing has come to our attention that causes us to
believe that the Sustainability Report does not include the required data and information for a “In
accordance – Core” option as defined by the GRI Standards and by the Article 508-G of the Portuguese
Companies Act.
Lisbon, 09 March 2022
Ernst & Young Audit & Associados – SROC, S.A.
Sociedade de Revisores Oficiais de Contas
Represented by:
(signed)
Manuel Ladeiro de Carvalho Coelho da Mota – ROC nº 1410
Registered with the Portuguese Securities Market Commission under license nr. 20161020
2/2
159
1.0 HIGHLIGHTS 2.0 SUSTAINABILITY STRATEGY 3.0 SUSTAINABILITY GOVERNANCE 4.0 OUR PERFORMANCE 5.0 PERFORMANCE INDICATORS 6.0 ABOUT THIS REPORTSustainability Report 2021 Financial Statements
and Final Notes
160
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Consolidated
Financial Statements
161
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Interest Income
Interest Expenses
Net Interest Income
Dividend income
Fees and comission income
Fees and comission expenses
Gains or losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
Gains or losses on financial assets and liabilities held for trading
Gains or losses on financial assets mandatorily at fair value through profit or loss
Gains or losses on financial assets and liabilities designated at fair value through profit and loss
Gains or losses from hedge accounting
Exchange differences
Gains or losses on derecognition of non-financial assets
Other operating income
Other operating expenses
Operating Income
Administrative expenses
Staff expenses
Other administrative expenses
Contributions to resolution funds and deposit guarantee
Depreciation
Provisions or reversal of provisions
Commitments and guarantees given
Other provisions
Impairment or reversal of impairment on financial assets not measured at fair value through profit or loss
Impairment or reversal of impairment of investment in subsidiaries, joint ventures and associates
Impairment or reversal of impairment on non-financial assets
Share of the profit or loss of investments in subsidiaries, joint ventures and associates accounted for using the equity method
Profit or loss before tax from continuing operations
Tax expense or income related to profit or loss from continuing operations
Current tax
Deferred tax
Profit or loss after tax from continuing operations
Profit or loss before tax from discontinued operations
Profit or loss for the year
Attributable to Shareholders of the parent
Attributable to non-controlling interests
Basic earnings per share (in Euros)
Diluted earnings per share (in Euros)
Basic earnings per share of continuing activities (in Euros)
Diluted earnings per share of continuing activities (in Euros)
* Pro-forma considering the transfer of the Spanish Branch to discontinued operations, which occurred in the third quarter of 2020
The accompanying explanatory notes are an integral part of these consolidated financial statements.
Notes
31.12.2021
31.12.2020
(in thousands of Euros)
10
10
11
12
12
13
13
13
13
13
13
14
15
15
16
18
19
27.29
34
20
20
20
26
32
37
21
21
21
21
740 459
(167 065)
573 394
11 096
325 511
(47 357)
(5 123)
50 896
46 697
21
14 195
10 805
7 551
163 875
(181 604)
969 957
(374 359)
(233 261)
(141 098)
(40 535)
(34 004)
(127 835)
9 840
(137 675)
(198 903)
315
(26 314)
3 794
172 116
15 186
(12 737)
27 923
187 302
4 887
192 189
184 504
7 685
192 189
0.02
0.02
0.02
0.02
743 707
(188 573)
555 134
16 478
313 823
(47 305)
88 472
(91 611)
(364 000)
-
(11 641)
(2 414)
(3 416)
120 732
(230 294)
343 958
(398 769)
(245 606)
(153 163)
(35 048)
(33 072)
(186 423)
(22 116)
(164 307)
(755 070)
(4 192)
(245 778)
9 430
(1 304 964)
(1 082)
8 639
(9 721)
(1 306 046)
(33 345)
(1 339 391)
(1 329 317)
(10 074)
(1 339 391)
(0.14)
(0.14)
(0.13)
(0.13)
162
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED 31 DECEMBER 2021 AND 2020
Net profit / (loss) for the year
Other comprehensive income/(loss)
Items that will not be reclassified to results
Actuarial gains / (losses) on defined benefit plans
Other comprehensive income from associates accounted for using the equity method
Fair value changes of equity instruments measured at fair value through other comprehensive income
Fair value changes of financial liabilities at fair value through profit or loss that is attributable to changes in their credit risk
Items that may be reclassified to results
Foreign exchange differences
Financial assets at fair value through other comprehensive income
Total other comprehensive income/(loss) for the year
Attributable to non-controlling interest
Attributable to Shareholders of the Bank
a) See Statement of Changes in the Consolidated Equity
The accompanying explanatory notes are an integral part of these consolidated financial statements.
(in thousands of Euros)
Notes
31.12.2021
31.12.2020
192 189
(1 339 391)
a)
a)
a)
a)
a)
a)
(82 878)
(75 584)
(252)
(7 042)
-
(139 191)
95
(139 286)
(29 880)
7 685
(127 689)
(124 331)
(2 048)
(12 193)
10 883
6 580
(1 518)
8 098
(1 460 500)
(10 074)
(37 565)
(1 450 426)
163
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2021 AND 2020
Assets
Cash. cash balances at central banks and other demand deposits
Financial assets held for trading
Financial assets mandatorily at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Financial assets at amortised cost
Securities
Loans and advances to banks
Loans and advances to customers
Derivatives – Hedge accounting
Fair value changes of the hedged items in portfolio hedge of interest rate risk
Investments in subsidiaries. joint ventures and associates
Tangible assets
Tangible fixed assets
Investment properties
Intangible assets
Tax assets
Current Tax Assets
Deferred Tax Assets
Other assets
Non-current assets and disposal groups classified as held for sale
Total Assets
Liabilities
Financial liabilities held for trading
Financial liabilities measured at amortised cost
Deposits from banks
(of which. Repurchase Agreement)
Due to customers
Debt securities issued. Subordinated debt and liabilities associated to transferred assets
Other financial liabilities
Derivatives – Hedge accounting
Provisions
Tax liabilities
Current Tax liabilities
Deferred Tax Liabilities
Other liabilities
Liabilities included in disposal groups classified as held for sale
Total Liabilies
Equity
Capital
Accumulated other comprehensive income
Retained earnings
Other reserves
Profit or loss attributable to Shareholders of the parent
Minority interests (Non-controlling interests)
Total Equity
Total Liabilities and Equity
The accompanying explanatory notes are an integral part of these consolidated financial statements.
Notes
31.12.2021
31.12.2020
(in thousands of Euros)
22
23
24
24
24
25
25
27
28
29
30
31
32
23
33
25
34
30
35
32
36
37
37
37
37
5 871 538
377 664
799 592
7 220 996
26 039 902
2 338 697
50 466
23 650 739
19 639
30 661
94 590
864 132
238 945
625 187
67 986
779 892
35 653
744 239
2 442 550
9 373
44 618 515
306 054
40 215 994
10 745 155
1 529 847
27 582 093
1 514 153
374 593
44 460
442 834
15 297
12 262
3 035
443 437
968
41 469 044
6 054 907
(1 045 489)
(8 576 860)
6 501 374
184 504
31 035
3 149 471
44 618 515
2 695 459
655 273
960 962
7 907 587
25 898 046
2 229 947
113 795
23 554 304
12 972
63 859
93 630
779 657
187 052
592 605
48 833
775 498
610
774 888
2 944 292
1 559 518
44 395 586
554 791
37 808 767
10 102 896
1 625 724
26 322 060
1 017 928
365 883
72 543
384 382
14 324
9 203
5 121
417 762
1 996 382
41 248 951
5 900 000
(823 420)
(7 202 828)
6 570 154
(1 329 317)
32 046
3 146 635
44 395 586
164
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARS ENDED 31 DECEMBER 2021 AND 2020
Capital increase by incorporation of special reserve for deferred taxes
34
154 907
5 900 000
(823 420)
(7 202 828)
6 570 154
(1 329 317)
5 900 000
(823 420)
(7 202 828)
6 570 154
(1 329 317)
Balance as at 31 December 2019
Other Increase / Decrease in Equity
Appropriation to retained earnings of net profit / (loss) of the previous year
Reserve of Contingent Capital Agreement
Other movements
Total comprehensive income for the year
Changes in fair value, net of tax
Foreign exchange differences, net of tax
Remeasurement of defined benefit plans, net of tax
Other comprehensive income appropriated from associated companies
Variation in the credit risk of financial liabilities at fair value, net of taxes
Reserves of impairment of securities at fair value through OCI
Reserves of sales of securities at fair value through OCI
Net profit / (loss) for the year
Balance as at 31 December 2020
Balance as at 31 December 2020
Other Increase / (Decrease) in Equity
Appropriation to retained earnings of net profit / (loss) of the previous year
Reserve of Contingent Capital Agreement
Other movements
Total comprehensive income for the year
Changes in fair value, net of tax
Foreign exchange differences, net of tax
Remeasurement of defined benefit plans, net of tax
Other comprehensive income appropriated from affiliates
Reserves of impairment of securities at fair value through OCI
Reserves of sales of securities at fair value through OCI
Net profit/(loss) of the year
Balance as at 31 December 2021
Notes
Share Capital
Other
Comprehensive
Income
Retained earnings
Other reserves
Net profit/
(loss) of the year
attributable to
equity holders of
the parent
Non-controlling interests
Other
Comprehensive
Income
5 900 000
(702 311)
(6 115 245)
5 942 501
( 1 058 812)
(32 912)
627 653
28 772
596 315
2 566
1 058 812
1 058 812
-
-
-
-
-
-
(1 329 317)
(10 074)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(121 109)
12 729
(1 518)
(124 331)
(2 048)
10 883
(1 852)
(14 972)
-
(1 087 583)
(1 087 584)
-
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
35
35
16
35
35
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(222 069)
(125 801)
95
(75 584)
(252)
12
(20 539)
-
-
(154 907)
(1 374 032)
(1 374 246)
-
214
-
-
-
-
-
-
-
-
86 127
44 929
39 920
1 278
-
-
-
-
-
-
-
-
6 054 907
(1 045 489)
(8 576 860)
6 501 374
(in thousands of Euros)
Total
4 002 757
604 378
-
596 315
8 063
(1 460 500)
12 729
(1 518)
(124 331)
(2 048)
10 883
(1 852)
(14 972)
(1 339 391)
3 146 635
3 146 635
-
32 716
-
39 920
(7 204)
(29 880)
(125 801)
95
(75 584)
(252)
12
(20 539)
192 189
Other
69 536
5 496
-
-
5 496
-
-
-
-
-
-
-
-
-
75 032
75 032
-
(8 696)
-
-
(8 696)
-
-
-
-
-
-
-
-
66 336
3 149 471
165
-
-
-
-
-
-
-
(1 329 317)
-
1 329 317
1 329 317
-
-
-
-
-
-
-
-
-
(10 074)
(42 986)
(42 986)
-
-
-
-
-
184 504
7 685
-
-
-
-
-
-
-
-
-
-
-
-
184 504
184 504
7 685
(35 301)
The accompanying explanatory notes are an integral part of these consolidated financial statements.
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE YEARS ENDED 31 DECEMBER 2021 AND 2020
Cash flows from operating activities
Interest received
Interest paid
Fees and commissions received
Fees and commissions paid
Recoveries on loans previously written off
Contributions to the pension fund
Contributions to resolution funds and deposit guarantee
Cash payments to employees and suppliers
Changes in operating assets and liabilities:
Deposits with / from Central Banks
Financial assets mandatorily at fair value through profit or loss
Financial assets designated at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Financial assets at amortised cost
Debt securities
Loans and advances to banks
Loans and advances to customers
Financial liabilities at amortised cost
Deposits from banks
Due to customers
Derivatives - Hedge accounting
Other operating assets and liabilities
Net cash from operating activities before corporate income tax
Corporate income taxes paid
Net cash from operating activities
Cash flows from investing activities
Acquisition of investments in subsidiaries and associated companies
Sale of investments in subsidiaries and associated companies
Dividends received
Acquisition of investment properties
Sale of investment properties
Acquisition of tangible fixed assets
Sale of tangible fixed assets
Acquisition of intangible assets
Sale of intangible assets
Net cash from investing activities
Cash flows from financing activities
Contingent Capital Agreement
Emissão de obrigações e outros passivos titulados
Repayment of bonds and other liabilities
Net cash from financing activities
Net changes in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Net changes in cash and cash equivalents
Cash and cash equivalents at the end of the year
Cash and cash equivalents include:
Cash
Deposits with Central Banks
(of which, Restricted balances)
Deposits with banks
Total
The accompanying explanatory notes are an integral part of these consolidated financial statements.
Notes
31.12.2021
31.12.2020
(in thousands of Euros)
678 735
(160 704)
325 537
(47 357)
27 293
(86 708)
(40 535)
(330 884)
365 777
972 363
290 095
93 984
479 439
(344 041)
(129 026)
59 242
(274 257)
927 928
(331 734)
1 259 662
(1 552)
(565 133)
2 218 460
(35 560)
2 182 900
(4)
365
11 096
(4 973)
100 028
(81 973)
424
(25 696)
-
(733)
429 013
575 000
(11 834)
992 179
3 174 346
2 432 237
3 174 346
5 606 583
151 699
5 264 629
(264 955)
455 210
5 606 583
727 929
(239 957)
314 412
(47 304)
30 181
(269 419)
(35 048)
(392 640)
88 154
915 128
(453 921)
173
802 686
478 647
(654 460)
64 756
1 068 351
(2 696 827)
(655 784)
(2 041 043)
(3 151)
830 403
(38 708)
(22 645)
(61 353)
(2 919)
58 283
16 478
(11 966)
67 581
(48 285)
4 566
(26 866)
6 013
62 885
1 035 016
-
(189 913)
845 103
846 635
1 585 602
846 635
2 432 237
149 205
2 292 797
(263 222)
253 457
2 432 237
166
22
22
22
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2021
(Amounts expressed in thousands of Euro, except when otherwise indicated)
NOTE 1 – ACTIVITY AND GROUP STRUCTURE
Novo Banco, S.A. is the main entity of the financial novobanco Group focused on the banking activity,
having been incorporated on the 3rd of August 2014 per deliberation of the Board of Directors of Bank
of Portugal (the Central Bank of Portugal) dated 3rd of August 2014 (8 p.m.), under No. 5 of article 145-
G of the General Law on Credit Institutions and Financial Companies (“Regime Geral das Instituições de
Crédito e Sociedades Financeiras” (RGICSF)) , approved by Decree-Law No. 298/92, of 31 December,
following the resolution measure applied by Bank of Portugal to Banco Espírito Santo, S.A. (BES), under
the terms of paragraphs 1 and 3-c) of article 145-C of the RGICSF, from which resulted the transfer of
certain assets, liabilities and off-balance sheet elements as well as assets under management of BES
from BES to novobanco (novobanco or Bank).
As a result of the resolution measure applied, Fundo de Resolução (“Resolution Fund”) became the sole
owner of the share capital of novobanco, in the amount of Euro 4,900 million, which acquired the status
of a transition Bank, with a limited duration, due to the commitment assumed by the Portuguese State
with the European Commission to sell its shares within two years from the date of its incorporation,
extendable for one year.
On 31 March 2017, the Resolution Fund signed the sale agreement of novobanco. On 18 October 2017,
the sale process was concluded, following the acquisition of the majority (75%) of its share capital
by Nani Holdings, SGPS, SA, a company belonging to the North American group Lone Star, through
two share capital increases in the amount of Euro 750 million and Euro 250 million, in October and
December, respectively.
With the conclusion of the sale process, novobanco ceased to be considered a transition Bank and
began to operate normally, although still being subject to certain measures restricting its activity,
imposed by the European Competition Authority.
Since 18 October 2017 the financial statements of novobanco are consolidated by Nani Holdings SGPS,
S.A., with registered office at Avenida D. João II, No. 46, 4A, Lisbon. LSF Nani Investments S.à.r.l.,
headquartered in Luxembourg, is the parent company of the Group.
NOVO BANCO, S.A. has its registered office in Lisbon, at Avenida da Liberdade, No. 195.
novobanco Group (hereinafter also designated as Group or novobanco Group) has a retail network
comprising 311 branches in Portugal and abroad (31 December 2020: 359 branches), including
branches in Spain and Luxembourg, and 4 representative offices in Switzerland (31 December 2020: 4
representative offices).
Group companies in which the Bank has a direct or indirect holding higher or equal to 20%, over
which the Bank exercises control or significant influence, and that were included in the consolidation
perimeter, are presented below.
1. References made to RGICSF refer to the version in force at the date of the resolution measure. The current version of the RGICSF has suffered changes, namely in article 145, following the publication of Law 23-A 2015, of 26 March, that came into force on the day following
its publication.
167
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes The entities directly consolidated into novobanco are the following:
The entities directly consolidated into novobanco are the following:
Year of
incorporation
Year
acquired
Registered office
Activity
Share-holding
%
Consolidation method
NOVO BANCO, SA
Novo Banco dos Açores, SA (novobanco Açores)
BEST - Banco Electrónico de Serviço Total, SA (BEST)
NB África, SGPS, SA
GNB - Gestão de Ativos, SGPS, SA (GNB GA)
ES Tech Ventures, S.G.P.S., SA (ESTV)
NB Finance, Ltd. (NBFINANCE)
GNB Concessões, SGPS, SA (GNB CONCESSÕES)
Espírito Santo Representações, Ltda. (ESREP)
Aroleri, SLU
Fundo de Capital de Risco NOVO BANCO PME Capital Growth
Fundo FCR PME / NOVO BANCO
Fundo de Gestão de Património Imobiliário - FUNGEPI - Novo Banco
Fundo de Gestão de Património Imobiliário - FUNGEPI - Novo Banco II
FUNGERE - Fundo de Gestão de Património Imobiliário
ImoInvestimento – Fundo Especial de Investimento Imobiliário Fechado
Prediloc Capital – Fundo Especial de Investimento Imobiliário Fechado
Imogestão – Fundo de Investimento Imobiliário Fechado
Arrábida - Fundo Especial de Investimento Imobiliário Fechado
Invesfundo VII – Fundo de Investimento Imobiliário Fechado
NB Logística - Fundo Especial de Investimento Imobiliário Aberto
NB Património - Fundo de Investimento Imobiliário Aberto
Fundes - Fundo Especial Investimento Imobiliário Fechado
NB Arrendamento - Fundo de Investimento Imobiliário Fechado para Arrendamento Habitacional
Fimes Oriente - Fundo de Investimento Imobiliário Fechado
Fundo de Investimento Imobiliário Fechado Amoreiras
Novimove - Fundo de Investimento Imobiliario Fechado
Five Stars - Fundo Especial de Investimento Imobiliário Fechado
Febagri-Actividades Agropecuárias e Imobiliárias SA
Autodril - Sociedade Imobiliária, SA
JCN - IP - Investimentos Imobiliários e Participações, SA
Greenwoods Ecoresorts empreendimentos imobiliários, SA
Sociedade Imobiliária Quinta D. Manuel I, SA
Sociedade Agrícola Turística e Imobiliária da Várzea da Lagoa, SA
Imalgarve - Sociedade de Investimentos Imobiliários, SA
Herdade da Boina - Sociedade Imobiliária
Ribagolfe - Empreendimentos de Golfe, SA
Benagil - Promoção Imobiliária, SA
Fundo de Investimento Imobiliário Fechado Quinta da Ribeira
Promofundo - Fundo Especial de Investimento Imobiliário Fechado
Herdade da Vargem Fresca VI - Comércio e Restauração SA
Locarent - Companhia Portuguesa de Aluguer de Viaturas, SA (LOCARENT)
UNICRE - Instituição Financeira de Crédito, SA
Edenred Portugal, SA
ESEGUR - Empresa de Segurança, SA (ESEGUR)
Multipessoal Recursos Humanos - SGPS, S.A
2014
2002
2001
2009
1992
2000
2015
2002
1996
2021
2009
1997
1997
2011
1997
2012
2006
2006
2006
2008
2007
1992
2008
2009
2004
2006
2004
2006
2006
1998
1995
2012
2012
2012
1986
1999
1995
1970
2006
2008
1997
2003
1974
1984
1994
1993
-
2002
2001
2009
1992
2000
2015
2003
1996
2021
2009
1997
2012
2012
2012
2012
2012
2013
2013
2013
2012
2014
2015
2012
2012
2015
2019
2019
2012
2012
2012
2012
2012
2012
2014
2012
2012
2012
2017
2018
2012
2003
2010
2013
2004
1993
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Commercial Banking
Commercial Banking
57,53%
Full consolidation
Electronic banking
100.00%
Full consolidation
Holding
Holding
Holding
100.00%
Full consolidation
100.00%
Full consolidation
100.00%
Full consolidation
Cayman Islands
Issue and distribution of securities
100.00%
Full consolidation
Portugal
Brazil
Spain
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Holding
100.00%
Full consolidation
Representation services
99,99%
Full consolidation
Real estate development
100.00%
Full consolidation
Venture capital fund
100.00%
Full consolidation
Venture capital fund
56.78%
Full consolidation
Real Estate Fund
100.00%
Full consolidation
Real Estate Fund
100.00%
Full consolidation
Real Estate Fund
95.28%
Full consolidation
Real Estate Fund
100.00%
Full consolidation
Real Estate Fund
100.00%
Full consolidation
Real Estate Fund
100.00%
Full consolidation
Real Estate Fund
100.00%
Full consolidation
Real Estate Fund
100.00%
Full consolidation
Real Estate Fund
92.49%
Full consolidation
Real Estate Fund
56.33%
Full consolidation
Real Estate Fund
100.00%
Full consolidation
Real Estate Fund
100.00%
Full consolidation
Real Estate Fund
100.00%
Full consolidation
Real Estate Fund
95.24%
Full consolidation
Real Estate Fund
100.00%
Full consolidation
Real Estate Fund
100.00%
Full consolidation
Real Estate development
100.00%
Full consolidation
Real Estate development
100.00%
Full consolidation
Real Estate development
95.28%
Full consolidation
Real Estate development
100.00%
Full consolidation
Real Estate development
100.00%
Full consolidation
Real Estate development
100.00%
Full consolidation
Real Estate development
100.00%
Full consolidation
Real Estate development
100.00%
Full consolidation
Golf course operations
100.00%
Full consolidation
Real Estate development
100.00%
Full consolidation
Real Estate Fund
100.00%
Full consolidation
Real Estate Fund
100.00%
Full consolidation
Catering
Renting
Non banking financing
Services provider
95.28%
Full consolidation
50.00%
17.50%
50.00%
b)
a)
b)
Equity method
Equity method
Equity method
Private security services
44.00%
Equity method
Management of shareholdings
22.52%
Equity method
a) The percentage presented above reflects the Group's economic interest. These entities were included in the consolidated balance sheet through the equity method as the Group exercises significant influence over their activities
b) Entities consolidated under the equity method as the voting rights grant control to the other shareholders
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 9 -
168
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Subgroups:
Subgroups:
Subgroups:
Year of
Year of
incorporation
incorporation
Year
Year
acquired
acquired
Registered office
Registered office
Activity
Activity
Share-holding
%
Share-holding
%
Consolidation method
Consolidation method
GNB - Gestão de Ativos, SGPS, SA (GNB GA)
GNB - Gestão de Ativos, SGPS, SA (GNB GA)
GNB Fundos Mobiliários - Sociedade Gestora de Organismos de Investimento Coletivo, SA
GNB Fundos Mobiliários - Sociedade Gestora de Organismos de Investimento Coletivo, SA
GNB Real Estate - Sociedade Gestora de Organismos de Investimento Coletivo, SA
GNB Real Estate - Sociedade Gestora de Organismos de Investimento Coletivo, SA
GNB - Sociedade Gestora de Fundos de Pensões, SA
GNB - Sociedade Gestora de Fundos de Pensões, SA
Espírito Santo International Asset Management, Ltd.
Espírito Santo International Asset Management, Ltd.
GNB - Sociedade Gestora de Patrimónios, SA
GNB - Sociedade Gestora de Patrimónios, SA
GNB - International Management, SA
GNB - International Management, SA
ES Tech Ventures, S.G.P.S., SA (ESTV)
ES Tech Ventures, S.G.P.S., SA (ESTV)
Yunit Serviços, SA
Yunit Serviços, SA
Fundo de Capital de Risco NOVO BANCO PME Capital Growth
Fundo de Capital de Risco NOVO BANCO PME Capital Growth
Righthour, SA
Righthour, SA
Fundo FCR PME / NOVO BANCO
Fundo FCR PME / NOVO BANCO
Epedal - Indústria de Componentes Metálicos, S.A.
Epedal - Indústria de Componentes Metálicos, S.A.
Nexxpro - Fábrica de Capacetes, S.A.
Nexxpro - Fábrica de Capacetes, S.A.
Cristalmax – Indústria de Vidros, S.A.
Cristalmax – Indústria de Vidros, S.A.
Ach Brito & Ca, SA
Ach Brito & Ca, SA
M. N. Ramos Ferreira, Engenharia, SA
M. N. Ramos Ferreira, Engenharia, SA
GNB Concessões, SGPS, SA (GNB CONCESSÕES)
GNB Concessões, SGPS, SA (GNB CONCESSÕES)
Lineas – Concessões de Transportes, SGPS, SA
Lineas – Concessões de Transportes, SGPS, SA
1992
1992
1987
1987
1992
1992
1989
1989
1998
1998
1987
1987
1995
1995
2000
2000
2000
2000
2009
2009
2013
2013
1997
1997
1981
1981
2001
2001
1994
1994
1918
1918
1983
1983
2002
2002
2008
2008
1992
1992
1987
1987
1992
1992
1989
1989
1998
1998
1987
1987
1995
1995
2000
2000
2000
2000
2009
2009
2013
2013
1997
1997
2015
2015
2015
2015
2017
2017
2015
2015
2013
2013
2003
2003
2010
2010
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
British Virgin Islands
British Virgin Islands
Portugal
Portugal
Luxembourg
Luxembourg
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Portugal
Holding
Holding
Investment Funds management
Investment Funds management
Investment Funds management
Investment Funds management
Investment Funds management
Investment Funds management
Investment Funds management
Investment Funds management
Wealth management
Wealth management
Investment Funds management
Investment Funds management
Holding
Holding
Internet portal management
Internet portal management
Venture capital fund
Venture capital fund
Services
Services
Venture capital fund
Venture capital fund
Holding
Holding
Helmet manufacturing
Helmet manufacturing
Glass manufacturing
Glass manufacturing
Soap manufacturing
Soap manufacturing
Engeneering
Engeneering
Holding
Holding
Holding
Holding
a) The percentage presented above reflects the Group's economic interest. These entities were included in the consolidated balance sheet through the equity method as the Group exercises significant influence over their activities
b) Entities consolidated under the equity method as the voting rights grant control to the other shareholders
a) The percentage presented above reflects the Group's economic interest. These entities were included in the consolidated balance sheet through the equity method as the Group exercises significant influence over their activities
b) Entities consolidated under the equity method as the voting rights grant control to the other shareholders
b)
b)
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
50,00%
50,00%
100,00%
100,00%
100,00%
100,00%
100,00%
100,00%
33,33%
33,33%
100,00%
100,00%
100,00%
100,00%
56,78%
56,78%
12,22%
12,22%
38,99%
38,99%
18,96%
18,96%
8,77%
8,77%
8,11%
8,11%
100,00%
100,00%
40,00%
40,00%
a)
a)
a)
a)
a)
a)
a)
a)
a)
a)
a)
a)
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Equity method
Equity method
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Equity method
Equity method
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Equity method
Equity method
Equity method
Equity method
Equity method
Equity method
Equity method
Equity method
Equity method
Equity method
Full consolidation
Full consolidation
Equity method
Equity method
Additionally, and considering the requirements of IFRS 10, the Group’s consolidation perimeter includes
the following structured entities:
Additionally, and considering the requirements of IFRS 10, the Group’s consolidation perimeter includes the following structured
Additionally, and considering the requirements of IFRS 10, the Group’s consolidation perimeter includes the following structured
entities:
entities:
Year of incorporation
Year of incorporation
Year acquired
Year acquired
Registered
Registered
office
office
Share-holding %
Share-holding %
Consolidation method
Consolidation method
Lusitano Mortgages No.6 plc (*)
Lusitano Mortgages No.6 plc (*)
Lusitano Mortgages No.7 plc (*)
Lusitano Mortgages No.7 plc (*)
2007
2007
2008
2008
(*) - Structured entities set up in the scope os securitization operations, recorded in the consolidated financial statements in accordance with the continued involvement of the Group in these
(*) - Structured entities set up in the scope os securitization operations, recorded in the consolidated financial statements in accordance with the continued involvement of the Group in these
operations, determined based on the percentage of the equity pieces held of the respective vehicles (see Note 41)
operations, determined based on the percentage of the equity pieces held of the respective vehicles (see Note 41)
Full consolidation
Full consolidation
Full consolidation
Full consolidation
Ireland
Ireland
Ireland
Ireland
100%
100%
100%
100%
2007
2007
2008
2008
During 2021, the main changes in novobanco Group’s structure were as follows:
During 2021, the main changes in novobanco Group’s structure were as follows:
During 2021, the main changes in novobanco Group’s structure were as follows:
- Subsidiaries and branches
- Subsidiaries and branches
Subsidiaries and branches
•
•
In February 2021, Imoinvestimento Fund granted additional supplementary payments to the real
estate companies Quinta D. Manuel I, Várzea da Lagoa and Promotur in the amounts of Euro 50
thousand, Euro 110 thousand and Euro 260 thousand, respectively;
In March 2021, GNB - Serviços de Suporte Operacional, ACE was dissolved, with no impact on the
income statement;
•
In July 2021, GNB – Recuperação de Crédito, ACE was dissolved, with no impact on the income
statement;
In February 2021, Imoinvestimento Fund granted additional supplementary payments to the real estate companies Quinta
In February 2021, Imoinvestimento Fund granted additional supplementary payments to the real estate companies Quinta
D. Manuel I, Várzea da Lagoa and Promotur in the amounts of Euro 50 thousand, Euro 110 thousand and Euro 260
D. Manuel I, Várzea da Lagoa and Promotur in the amounts of Euro 50 thousand, Euro 110 thousand and Euro 260
thousand, respectively;
•
thousand, respectively;
In March 2021, GNB - Serviços de Suporte Operacional, ACE was dissolved, with no impact on the income statement;
In March 2021, GNB - Serviços de Suporte Operacional, ACE was dissolved, with no impact on the income statement;
In July 2021, GNB – Recuperação de Crédito, ACE was dissolved, with no impact on the income statement;
In July 2021, GNB – Recuperação de Crédito, ACE was dissolved, with no impact on the income statement;
In July 2021, the real estate company Imoascay was liquidated, with no impact on the income statement;
In July 2021, the real estate company Imoascay was liquidated, with no impact on the income statement;
In September 2021, the real estate fund ASAS Invest was liquidated, with no impact on the income statement;
In September 2021, the real estate fund ASAS Invest was liquidated, with no impact on the income statement;
In September 2021, FCR PME NB Fund partially redeemed participation units in the total amount of Euro 1,550 thousand,
In September 2021, FCR PME NB Fund partially redeemed participation units in the total amount of Euro 1,550 thousand,
•
with novobanco receiving Euro 941 thousand;
with novobanco receiving Euro 941 thousand;
In October 2021, the redemption of Fungepi's participation units in the amount of Euro 45,000 thousand was carried out;
In October 2021, the redemption of Fungepi's participation units in the amount of Euro 45,000 thousand was carried out;
In October 2021, the redemption of NB Arrendamento participation units in the amount of Euro 500 thousand was carried
In October 2021, the redemption of NB Arrendamento participation units in the amount of Euro 500 thousand was carried
out;
out;
In November 2021, a capital increase of Euro 9,216 thousand in NB Logística was carried out, fully subscribed by
In November 2021, a capital increase of Euro 9,216 thousand in NB Logística was carried out, fully subscribed by
novobanco and Fungepi, through the delivery of real estate properties;
novobanco and Fungepi, through the delivery of real estate properties;
n November 2021, a redemption of participation units of Novimove in the amount of Euro 1,250 thousand was carried out;
n November 2021, a redemption of participation units of Novimove in the amount of Euro 1,250 thousand was carried out;
In November 2021, the real estate company Promotur was liquidated, with no impact on the income statement;
In November 2021, the real estate company Promotur was liquidated, with no impact on the income statement;
In November 2021, a 100% equity stake in Aroleri, SLU was acquired for Euro 4 thousand;
In November 2021, a 100% equity stake in Aroleri, SLU was acquired for Euro 4 thousand;
In December 2021, the real estate company Quinta da Areia was liquidated, with no impact on the income statement;
•
In July 2021, the real estate company Imoascay was liquidated, with no impact on the income
statement;
In September 2021, the real estate fund ASAS Invest was liquidated, with no impact on the income
statement;
In September 2021, FCR PME NB Fund partially redeemed participation units in the total amount of
Euro 1,550 thousand, with novobanco receiving Euro 941 thousand;
169
In December 2021, the real estate company Quinta da Areia was liquidated, with no impact on the income statement;
In December 2021, there were two capital increases of Fungepi II in the amount of Euro 24,090 thousand and Euro 11,696
In December 2021, there were two capital increases of Fungepi II in the amount of Euro 24,090 thousand and Euro 11,696
thousand, fully subscribed by novobanco and through the delivery of real estate properties, and a capital reduction of Euro
thousand, fully subscribed by novobanco and through the delivery of real estate properties, and a capital reduction of Euro
70,932 thousand;
70,932 thousand;
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 10 -
- 10 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
In October 2021, the redemption of Fungepi’s participation units in the amount of Euro 45,000
thousand was carried out;
During the financial year of 2020, the main changes in novobanco Group’s structure were as follows:
In October 2021, the redemption of NB Arrendamento participation units in the amount of Euro 500
thousand was carried out;
Subsidiaries and branches
•
•
•
•
•
•
•
•
•
In November 2021, a capital increase of Euro 9,216 thousand in NB Logística was carried out, fully
subscribed by novobanco and Fungepi, through the delivery of real estate properties;
In November 2021, a redemption of participation units of Novimove in the amount of Euro 1,250
thousand was carried out;
In November 2021, the real estate company Promotur was liquidated, with no impact on the income
statement;
In November 2021, a 100% equity stake in Aroleri, SLU was acquired for Euro 4 thousand;
In December 2021, the real estate company Quinta da Areia was liquidated, with no impact on the
income statement;
In December 2021, there were two capital increases of Fungepi II in the amount of Euro 24,090
thousand and Euro 11,696 thousand, fully subscribed by novobanco and through the delivery of real
estate properties, and a capital reduction of Euro 70,932 thousand;
In December 2021, the capital of Five Stars was increased in the amount of Euro 26,006 thousand,
fully subscribed and paid up by novobanco.
novobanco holds in its balance sheet mandatorily convertible securities (VMOC) from two entities
obtained through foreclosed credit, measured at the fair value which was estimated to be zero. The
extension of the conversion period of these VMOC into shares ended during the month of December
2021. The Group contests this conversion, having addressed to these securities issuers, letters of
formal notice for payment of the amounts. The amounts of assets to be recognized in the consolidated
financial statements resulting from a possible consolidation process could amount to Euro 2.4 million,
however, on this date, novobanco does not have information that allows the accurate determination of
the value of goodwill to be recognized in the financial statements. For this reason, the Group is within
the measurement period and continues to provisionally record the fair value of the VMOC in the balance
sheet. The measurement period will end when the Group has clarified all the facts and circumstances
related to the eventual conversion of the VMOC, on the possible need to recognize assets and liabilities
and to be able to measure goodwill, and this measurement period must not exceed the period of one
year.
Associated companies
In September 2021, FCR PME NB Fund sold its stake in LOGI C - Logística Integrada, SA, recording a
capital gain of Euro 84 thousand.
•
•
•
•
•
•
•
In April 2020, novobanco sold the entire participation and supplementary contributions of Herdade
do Pinheirinho and Herdade do Pinheirinho II, recording a gain of Euro 209 thousand.
In September 2020, Orey Urban Rehabilitation Fund was liquidated;
In November 2020, there was a capital reduction of the NB Arrendamento Fund in the amount of
Euro 2,800 thousand;
In December 2020, Solid and R Invest Funds, as well as Sociedade Portucale, were liquidated and
the holding held in Sociedade Herdade da Vargem Fresca VI is now held directly by Fungere Fund;
In December 2020, a capital increase of NB Logística Fund was carried out in the amount of Euro
23,200 thousand;
In December 2020, there was a capital increase of Fungepi Fund in the amount of Euro 84,079
thousand, having been subscribed by the Fungepi II and Fundes Funds (Euro 12,787 thousand and
Euro 71,292 thousand, respectively), with in-kind entry of real estate properties;
In December 2020, a capital increase of Fungepi II Fund was carried out in the amount of Euro 1,444
thousand, having been subscribed by Fungepi Fund and by the entities Febagri and Imoascay (Euro
963 thousand, Euro 30 thousand and Euro 451 thousand, respectively) with in-kind entry of real
estate properties.
Associated companies
•
•
•
•
•
In June 2020, FCR PME NB converted a credit granted to Nexxpro in the amount of Euro 639
thousand into supplementary contributions.
In June 2020, FCR PME NB sold its stake in Enkrott, at the balance sheet value;
In December 2020, FCR PME NB converted a credit granted to Nexxpro in the amount of EUR 2,280
thousand into supplementary installments.
In December 2020, Ijar Leasing made a capital increase, and novobanco did not accompany this
operation, so the Group’s participation in this Company went from 24.5% to 18.85%;
In December 2020, the PNCB - Plataforma de Negociação Integrada de Créditos Bancários, A.C.E.
has been extinct.
170
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes During 2021 and 2020, the movements relating to acquisitions, sales and other investments and
repayments in subsidiary and associated companies are detailed as follows:
During 2021 and 2020, the movements relating to acquisitions, sales and other investments and repayments in subsidiary and
associated companies are detailed as follows:
Subsidiary companies
Quinta D. Manuel I
Várzea da Lagoa
Promotur
FCR PME NB
Fungepi II
Fungepi
NB Logística
NB Arrendamento
Novimove
Aroleri
Five Stars
Associated companies
LOGI C - Logística Integrada
Acquisition
Value
Acquisitions
Other
Investments
(a)
31.12.2021
Sales
(in thousands of Euros)
Total
Sale price
Other
reimbursements
(a)
Total
Gains/ Losses in
sales/settlements
-
-
-
-
-
-
-
-
-
4
-
4
-
-
50
110
260
-
41 493
-
9 216
-
-
600
26 006
77 735
50
110
260
-
41 493
-
9 216
-
-
604
26 006
77 739
-
-
-
-
4
77 735
77 739
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
( 4 427)
( 70 932)
( 45 000)
-
( 500)
( 1 250)
-
-
( 122 109)
-
-
-
( 4 427)
( 70 932)
( 45 000)
-
( 500)
( 1 250)
-
-
( 122 109)
365
365
365
-
-
365
365
( 122 109)
( 121 744)
-
-
-
-
-
-
-
-
-
-
-
-
84
84
84
(a) Capital increases/ decreases, supplementary capital, supplies, transactions involving the exchange of financial instruments and incorporation of companies
Subsidiary companies
Herdade do Pinheirinho
Herdade do Pinheirinho II
NB Arrendamento
NB Logística
Fungepi
Fungepi II
Benagil
Ribagolfe
Associated companies
Nexxpro
Enkrott
Acquisition
Value
Acquisitions
Other
Investments
(a)
31.12.2020
Total
Sale price
Sales
Total
Other
reimburseme
nts (a)
(in thousands of Euros)
Gains/ Losses in
sales/settlements
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23 200
84 079
1 444
500
100
109 323
-
-
-
23 200
84 079
1 444
500
100
109 323
2 919
-
2 919
2 919
-
2 919
14 996
44 744
-
-
-
-
-
-
59 740
-
1 134
1 134
-
-
( 2 800)
-
-
-
-
-
( 2 800)
14 996
44 744
( 2 800)
-
-
-
-
-
56 940
-
-
-
-
1 134
1 134
4 284
( 4 075)
-
-
-
-
-
-
209
-
-
-
112 242
112 242
60 874
( 2 800)
58 074
209
(a) Capital increases/ decreases, supplementary capital, supplies, transactions involving the exchange of financial instruments and incorporation of companies
The subsidiaries classified under IFRS 5 as non-current assets held for sale and discontinued operations, are detailed in Note 32.
NOTE 2 – BASIS OF PRESENTATION
The consolidated financial statements of novobanco are presented as at 31 December 2021, expressed in thousands of euros,
rounded to the nearest thousand. The accounting policies used by the Group in the preparation are consistent with those used in the
preparation of the financial statements as of December 31, 2020. The changes to the most relevant accounting policies are described
in Note 5.
The consolidated financial statements of novobanco have been prepared under the assumption of continuity of operations from the
accounting records and following the historical cost convention, except for the assets and liabilities accounted for at fair value, namely
derivative financial instruments, financial assets and liabilities at fair value through profit or loss, financial assets at fair value through
other comprehensive income, investment properties and hedged assets and liabilities, in respect of their hedged component.
The consolidated financial statements and the Management Report of 31 December 2021 were approved at the Executive Board of
Directors’ meeting held on March 2, 2022 and will be submitted to the General Assembly of Shareholders, which has the power to
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 12 -
171
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The subsidiaries classified under IFRS 5 as non-current assets held for sale and discontinued operations,
are detailed in Note 32.
IFRS comprise accounting standards issued by the International Accounting Standards Board (IASB)
and interpretations issued by the International Financial Reporting Interpretation Committee (IFRIC)
and its predecessor body the Standing Interpretations Committee (SIC).
NOTE 2 – BASIS OF PRESENTATION
The consolidated financial statements of novobanco are presented as at 31 December 2021, expressed
in thousands of euros, rounded to the nearest thousand. The accounting policies used by the Group
in the preparation are consistent with those used in the preparation of the financial statements as of
December 31, 2020. The changes to the most relevant accounting policies are described in Note 5.
The consolidated financial statements of novobanco have been prepared under the assumption of
continuity of operations from the accounting records and following the historical cost convention,
except for the assets and liabilities accounted for at fair value, namely derivative financial instruments,
financial assets and liabilities at fair value through profit or loss, financial assets at fair value through
other comprehensive income, investment properties and hedged assets and liabilities, in respect of
their hedged component.
The consolidated financial statements and the Management Report of 31 December 2021 were
approved at the Executive Board of Directors’ meeting held on March 2, 2022 and will be submitted
to the General Assembly of Shareholders, which has the power to justifiably decide to change them.
However, it is Executive Board of Directors conviction that these consolidated financial statements will
be approved without changes.
NOTE 3 –STATEMENT OF COMPLIANCE
The consolidated financial statements of novobanco have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted in the European Union in force on January
1, 2021, under Regulation (EC) nº 1606/2002 of the European Parliament and of the Council, of July 19,
2002, and Notice nº 5/2015 of Bank of Portugal.
Standard / Interpretation
Description
NOTE 4 – PRESENTATION OF FINANCIAL
STATEMENTS
The Group presents its statement of financial position in order of liquidity based on the Group’s intention
and perceived ability to recover/settle the majority of assets/liabilities of the corresponding financial
statement line item.
An analysis regarding recovery or settlement within 12 months after the reporting date (current) and
more than 12 months after the reporting date (noncurrent) is presented throughout the different
balance sheet notes.
NOTE 5 – CHANGES IN ACCOUNTING POLICIES
In the preparation of its financial statements with reference to December 31, 2021, the Group did not
early adopt any new standard, interpretation or amendment issued, but not yet in force. The changes
to the standards adopted by the Group are as follows:
Norms, interpretations, amendments, and revisions that came into force in the fiscal year
The following norms, interpretations, amendments, and revisions adopted (“endorsed”) by the
European Union have mandatory application for the first time in the fiscal year beginning January 1,
2021:
Amendments to IFRS 16 - Leases -
COVID-19 Related Concessions for Rentals
Beyond June 30, 2021
On May 28, 2020, the amendment to IFRS 16 entitled ‘Covid-19 Related Concessions’ was issued and introduced the following practical expedient: a lessee may elect not to assess whether a Covid-19 related concession of rent is a lease
modification.
Lessees that choose to apply this expedient, account for the change to rental payments resulting from a Covid-19 related concession in the same way as they account for a change that is not a lease modification under IFRS 16.
Initially, the practical expedient applied to payments originally due by June 30, 2021, however, due to the extended impact of the pandemic, on March 31, 2021, it was extended to payments originally due by June 30, 2022. The change
applies to annual reporting periods beginning on or after April 1, 2021.
In short, the practical expedient can be applied provided the following criteria are met:
•
• any reduction in lease payments only affects payments due on or before June 30, 2022; and
•
the change in lease payments results in a revised consideration for the lease that is substantially equal to, or less than, the consideration immediately prior to the change;
there are no significant changes to other terms and conditions of the lease.
Amendments to IFRS 4 - Insurance
Contracts
Deferral of IFRS 9
This amendment refers to the temporary accounting consequences that result from the difference between the effective date of IFRS 9 - Financial Instruments and the future IFRS 17 - Insurance Contracts. Specifically, the amendment
made to IFRS 4 postpones until January 1, 2023 the expiry date of the temporary exemption from the application of IFRS 9 in order to align the effective date of the latter with that of the new IFRS 17.
This temporary exemption is optional to apply and is only available to entities whose activities are predominantly insurance related.
Amendments to IFRS 9, IAS 39, IFRS 7,
IFRS 4 and IFRS 16 - Reform of benchmark
interest rates - phase 2
These amendments are part of the second phase of the IASB’s “IBOR reform” project and allow for exemptions related to reforming the benchmark for benchmark interest rates by an alternative interest rate (Risk Free Rate (RFR)). The
amendments include the following practical expedients:
• A practical expedient that requires contractual changes, or changes in cash flows that are directly required by the reform, to be treated the same as a floating interest rate change, equivalent to a movement in the market interest rate;
• Allow changes required by the reform to be made to hedge designations and hedge documentation without discontinuing the hedging relationship;
• Provide temporary operational relief to entities that must comply with the separately identifiable requirement when an RFR instrument is designated as a hedge of a risk component.
172
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes These standards and changes had no material impact on the Group’s financial statements.
NOTE 6 – BASIS OF CONSOLIDATION
These consolidated financial statements comprise the assets, liabilities, income, expenses, other
comprehensive income, and cash flows of novobanco and of its subsidiaries (Group or novobanco
Group) and the results attributable to the Group relating to shareholdings in associated companies.
These accounting policies have been consistently applied to all the Group companies during the
financial years covered by these consolidated financial statements.
Subsidiaries
Subsidiaries are entities (including investment funds and securitization vehicles) over which the Group
exercises control. The Group controls an entity when it is exposed, or has rights, to the variability of
the return deriving from its involvement with that entity and may take possession of same by way of
the power it has over the entity (de facto control) and has the ability to affect these variable returns
through the power it held over the relevant activities of the entity. As provided in IFRS 10, the Group
analyses the objective and the structuring of how an entity’s operations are developed when assessing
its control over such entity. Subsidiaries are fully consolidated from the date on which control over their
activities is transferred to the Group and until the date that control ceases. Holdings of third parties in
these entities are presented in the caption Non-controlling interests, except for open investment funds
in which these values are presented in the caption Other liabilities, due to the high probability of their
redemption or the limited duration that requires the delivery of values to the remaining participants.
The accumulated losses of a subsidiary are attributed proportionally to non-controlling interests even
if this results in the recognition of non-controlling interests of a negative value.
Gains or losses arising from the dilution or sale of a portion of the financial interest in a subsidiary, with
loss of control, are recognized by the Group in the income statement.
When control is obtained in a business combination achieved in stages (step acquisition) the Group
remeasures its previously held non-controlling interest in the entity at its fair value and recognizes
the resulting gain or loss in the income statement upon determining the respective goodwill. At the
moment of a partial sale, resulting in the loss of control of a subsidiary, any remaining non-controlling
interest retained is remeasured to its fair value at the date the control is lost, and the resulting gain or
loss is recognized in the income statement.
The entity identified as acquirer or incorporator integrates the results of the entity/ business acquired
as from the date of its acquisition, that is, from the date of the takeover of control.
The accounting treatment of mergers by incorporation, between entities under common control,
follows the same principles - the integration of the assets and liabilities of the entity to be incorporated
is carried out at the amounts presented in the consolidated financial statements of the entity that
has control over the two entities, at the highest level of the Group’s financial holdings chain (the
“predecessor”). The difference between the carrying book value of the incorporated assets and
liabilities and the amount of the financial investment is recognized as a merger reserve.
Associated companies
Associated companies are those entities over which the Group has significant influence over the
company’s financial and operating policies, but not its control. Generally, when the Group owns more
than 20% of the voting rights but less than 50%, it is presumed to have a significant influence. Even
if the Group owns less than 20% of the voting rights, it can still have a significant influence through
its participation in the management of the associated company or its representation in its executive
Management bodies.
Investments in associated companies are recorded in the consolidated financial statements of the
Bank using the equity method of accounting from the date on which significant influence is attained by
the Group and until the date that significant influence ceases. The carrying value of the investments in
associated companies includes the value of the respective goodwill determined at the acquisition date
and is presented net of impairment losses. The Group carries out impairment tests on its investments in
associated companies, whenever there are any indications of impairment. Impairment losses recognized
in prior years may be reversed, up to the limit of the accumulated losses.
In a step acquisition that results in the Group obtaining significant influence over an entity, any
previously held stake in that entity is remeasured to its fair value through the income statement when
the equity method is first applied
When the Group’s share of losses of an associated company equals or exceeds its interest in the
associated company, including any medium and long-term interest, the Group discontinues the
application of the equity method, except when it has a legal or constructive obligation to cover those
losses or has made payments on behalf of the associated company.
Gains or losses on disposals of shares in associated companies are recognized in the income statement
even if those disposals do not result in the loss of significant influence. Dividends attributed by
associated companies reduce the balance sheet value recognized by the Group.
Structured Entities (SE)
The Group consolidates, using the full consolidation method, certain special purpose entities, created
specifically to accomplish a narrow and well-defined objective, when the substance of the relationship
with those entities indicates that they are controlled by the Group, irrespective of the percentage of
the equity held.
The evaluation of the existence of control is made based on the established by IFRS 10 – Consolidated
Financial Statements, according to which a SE is controlled if (i) the Group is exposed or has rights to its
results; and (ii) the Group has the power to affect the SE’s results through the control it exercises over
them.
Investment funds managed by the Group
As part of its asset management activity, the Group manages investment funds on behalf of the hold-
ers of the participation units. The financial statements of these funds are not consolidated by the Group
except in the cases where control is exercised over their activity, according to the criteria established
by IFRS 10.
173
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Goodwill
Goodwill represents the difference between the acquisition cost and the fair value of the Group’s share
of identifiable net assets, liabilities and contingent liabilities acquired.
Business combinations occurring after 31 December 2009 were accounted for using the purchase
method. The acquisition cost includes the fair values: i) of the assets transferred, ii) of the liabilities
assumed by the acquirer before the previous shareholders of the acquired, and iii) of the equity
instruments issued.
In accordance with IFRS 3, the Group measures goodwill as the difference between the fair value of the
consideration transferred including the fair value of any non-controlling interest previously held, and
the fair value attributable to the assets acquired and the liabilities assumed, and any equity instruments
issued. The fair values are determined at the acquisition date. The costs directly attributable to the
acquisition are expensed at the moment of the acquisition.
As at the acquisition date, the non-controlling interests are measured at their proportional interest in
the fair value of the net identifiable assets acquired and liabilities assumed, without their respective
portion of goodwill. As a result, the goodwill recognized in these consolidated financial statements
corresponds solely to the portion attributable to the shareholders of the Bank.
In accordance with IFRS 3 – Business Combinations, positive goodwill is recognized as an asset at its
cost and is not amortised. Goodwill relating to the acquisition of associated companies is included in the
carrying book value of the investments in those associated companies, determined using the equity
method. Negative goodwill is recognized directly in the income statement in the period the business
combination occurs. Impairment losses of goodwill may not be reversed in the future.
For business combinations that are not completed at the end of the reporting period, the Group
estimates the provisional amounts of assets and liabilities to be included in the consolidated financial
statements, including the related goodwill. During the measurement period, which does not exceed
one year from the acquisition date, the provisional amounts recognized will be retrospectively adjusted
to reflect new information obtained, including the recognition of additional assets or liabilities.
Goodwill is tested for impairment annually and whenever circumstances indicate that its book value
may be impaired. Any impairment losses determined are recognized in the income statement. The
recoverable amount reduction is determined by assessing the recoverable amount of each cash-
generating unit (or group of cash-generating units) to which the goodwill refers. When the recoverable
amount of the cash-generating unit is less than it’s carrying amount, an impairment loss is recognized.
Impairment losses related to goodwill cannot be reversed in future periods.
Transactions with non-controlling interests
Acquisitions of non-controlling interests that do not result in a change in control over a subsidiary are
accounted for as transactions with shareholders and, therefore, no additional goodwill is recognized
as a result of such transactions. Any difference between the acquisition cost and the carrying book
value of the non-controlling interest acquired is recognized directly in reserves. Similarly, gains or losses
arising from sale of non-controlling interests that do not result in a loss of control over a subsidiary, are
always recorded against reserves.
Non-controlling interests for open investment funds are presented in the caption Other liabilities.
Balances and transactions eliminated with consolidation
Intercompany balances and transactions, including any unrealised gains and losses on transactions
between Group companies, are eliminated in preparing the consolidated financial statements, unless the
unrealised losses provide evidence of an impairment loss that should be recognized in the consolidated
financial statements.
Unrealised gains on transactions between the Group and its associated companies are eliminated to
the extent of the Group’s interest in the associated companies. Unrealised losses are also eliminated
unless the transactions reveal evidence of impairment.
The accounting policies of subsidiaries and associated companies are changed, whenever necessary, to
ensure that same are applied consistently throughout the Group.
The financial statements of each of the Group entities that have a functional currency different from
the Euro are translated into Euro in accordance with the following criteria:
• Assets and liabilities are translated using the exchange rate prevailing at the reporting date;
•
Income and expenses are translated at exchange rates approximating the real rates ruling at the
dates of the transactions;
• The exchange differences arising between the translation amount of the equity at the beginning of
the period and the amount determined at the balance sheet date of the consolidated accounts, using
the exchange rates applicable at that date, are recorded against reserves (other comprehensive
income). Similarly, regarding the subsidiaries and associated companies’ results, the exchange
differences arising from the translation of income and expenses at the rates ruling at the dates of
the transactions and that determined at the balance sheet date are recorded in reserves. When the
entity is sold, such exchange differences are recognized in results as an integral part of the gain or
loss on the disposal.
NOTE 7 – MAIN ACCOUNTING POLICIES
7.1. Foreign currency operations
7.1.1 Functional and presentational currency
The financial statements of each of the Group’s subsidiaries and associated companies are prepared
using their functional currency, which is defined as the currency of the primary economic environment
174
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes in which that entity operates. The Group’s consolidated financial statements are prepared in Euro,
which is novobanco functional currency.
7.1.2 Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rate
prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into Euro at the foreign
exchange rates ruling at the balance sheet date. Foreign exchange differences arising on this translation
are recognized in the income statement.
Non-monetary assets and liabilities recorded at historical cost, denominated in foreign currency, are
translated using the exchange rate prevailing at the transaction date. Non-monetary assets and
liabilities, denominated in foreign currency, that are stated at fair value are translated into Euro at
the foreign exchange rates ruling at the dates the fair value was determined. The resulting exchange
differences are accounted for in the income statement, except if related to equity instruments classified
as financial assets at fair value through other comprehensive income, which are recorded in equity
reserves.
Foreign exchange differences relating to cash flow hedges and the hedging of the net investment in
foreign operational units, when they exist, are recognized in other comprehensive income.
7.2. Recognition of interest income/expense
Interest income and expense is recognized in the income statement under interest and similar income
and interest expense and similar charges for all financial instruments measured at amortised cost and
for all financial assets at fair value through other comprehensive income, using the effective interest
rate method. Interest arising on financial assets and liabilities at fair value through profit or loss is also
included under interest and similar income or interest expense and similar charges, as appropriate.
The effective interest rate is the rate that discounts the estimated future cash payments or receipts
throughout the expected life of the financial instrument or, when appropriate, a shorter period to the
net book value of the financial asset or liability. The effective interest rate is calculated at inception and
is not subsequently revised, except in respect of financial assets and liabilities with a variable interest
rate. In this case, the effective interest rate is periodically revised, taking into consideration the impact
of the change in the interest rate of reference on the estimated future cash flows.
When calculating the effective interest rate, the Group estimates the cash flows considering all the
contractual terms of the financial instrument (for example, prepayment options) but does not consider
future credit losses. The calculation includes all the commissions that are an integral part of the effective
interest rate, transaction costs and all other related premiums or discounts.
Interest and similar income include interest from financial assets for which were recognized impairment.
The interest from financial assets classified as Stage 3 are determined based on the effective interest
rate method applied to the net book value. When the asset is no longer classified as Stage 3, the
interest is calculated based on the gross book value.
For derivative financial instruments, the interest component in the change in fair value of derivative
financial instruments classified as fair value hedge and fair value option is recognized under interest
income or interest expense. For other derivatives, the interest component inherent in the fair value
change will not be separated and will be classified under the income statement of assets and liabilities
held for trading (see note 7.5).
7.3. Recognition of fee and commission income
Fees and commissions income are recognized as revenue from customer contracts to the extent that
performance obligations are met:
• Fees and commissions that are earned on the execution of a significant act, such as loan syndication
fees, are recognized as income when the significant act has been completed;
• Fees and commissions earned over the period during which the services are provided are recognized
as income in the financial year in which the services are provided;
• Fees and commissions that are an integral part of the effective interest rate of a financial instrument
are recognized as income using the effective interest rate method, as described in note 7.2.
7.4. Recognition of dividend income
Dividend income is recognized when the right to receive the dividend payment is established.
7.5. Net trading income
Net income from financial assets and liabilities held for trading includes changes in fair value, interest
or expenses and dividends, as well as income from derivatives held for economic hedging that do not
qualify as hedging derivatives.
7.6. Net gain/ (loss) on financial assets and liabilities designated at
fair value through profit or loss
Net gain or loss on financial assets and liabilities designated at fair value through profit or loss includes
the net gain or loss from financial assets and financial liabilities designated as at fair value through
profit or loss and also from non-trading assets measured at fair value through profit or loss, as required
by or elected under IFRS 9. The line item includes fair value changes, interest, dividends and foreign
exchange differences.
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at amortized cost
7.8.4. Measurement categories for financial assets and liabilities
The Group classifies all of its financial assets based on the business model for managing the assets and
the asset’s contractual terms, measured at either:
Net loss on derecognition of financial assets measured at amortized cost includes loss (or income)
recognized on sale or derecognition of financial assets measured at amortized cost calculated as the
difference between the net book value (including impairment until the recoverable amount) and the
proceeds received.
7.8. Financial Instruments – Initial recognition
7.8.1. Date of Recognition
Financial assets and liabilities, with the exception of loans and advances to customers and balances
due to customers, are initially recognised on the trade date, i.e., the date on which the Group becomes
a party to the contractual provisions of the instrument. This includes regular way trades, i.e., purchases
or sales of financial assets that require delivery of assets within the time frame generally established by
regulation or convention in the marketplace. Loans and advances to customers are recognized when
funds are transferred to the customers’ accounts. The Group recognizes balances due to customers
when funds are transferred to the Group.
7.8.2. Initial measurement of financial instruments
The classification of financial instruments at initial recognition depends on their contractual terms
and the business model for managing the instruments, as described in note 7.10 Financial instruments
are initially measured at their fair value (as defined in note 7.9), except in the case of financial assets
and financial liabilities recorded at fair value through profit or loss, transaction costs are added to, or
subtracted from, this amount. Trade receivables are measured at the transaction price. When the fair
value of financial instruments at initial recognition differs from the transaction price, the Group accounts
for the Day 1 profit or loss, as described below.
7.8.3. Day one profit
When the transaction price of the instrument differs from the fair value at origination and the fair
value is based on a valuation technique using only inputs observable in market transactions, the
Group recognizes the difference between the transaction price and fair value in net trading income. In
those cases where fair value is based on models for which some of the inputs are not observable, the
difference between the transaction price and the fair value is deferred and is only recognized in profit or
loss when the inputs become observable, or when the instrument is derecognized
The Group recognizes in its income statement the gains arising from the intermediation fee (day one
profit), which is generated, primarily, through currency and derivative financial product intermediation,
given that the fair value of these instruments, both at inception and subsequently, is determined based
solely on observable market data and reflects the Group’s access to the (wholesale market).
• Amortized cost, as explained in note 7.10.1;
• Fair Value Through Other Comprehensive Income, as explained in notes 7.10.1, 7.10.2 and 7.10.3;
• Fair Value Through Profit or Loss, as set out in note 7.10.4.
• Mandatorily measured at fair value through profit or loss, as set out in note 7.10.4.
The Group classifies and measures its derivative and trading portfolio at fair value through profit or loss,
as explained in note 7.10.5. The Group may designate financial instruments at fair value through profit
or loss, if so doing eliminates or significantly reduces measurement or recognition inconsistencies, as
explained in note 7.10.6.
Financial liabilities, other than loan commitments and financial guarantees, are measured at amortized
cost or at fair value through profit or loss when they are held for trading and derivative.
7.9. Fair value of financial assets and liabilities
The fair value of listed financial assets is determined based on the closing price (bid-price), the price
of the last transaction made or the value of the last known price (bid). In the absence of quotation,
the Group estimates fair value using (i) valuation methodologies, such as the use of prices for recent
transactions, similar and carried out under market conditions, discounted cash flow techniques and
customized option valuation models in order to reflect the particularities and circumstances of the
instrument and (ii) valuation assumptions based on market information.
For the assets included in the level 3 of fair value hierarchy, whose quotation is provided by a third-party
using parameters not observable in the market, the Group proceeds, when applicable, to a detailed
analysis of the historical and liquidity performance of these assets, which may imply an additional
adjustment to its fair value, as well as a result of additional internal or external valuations.
The following is a brief description of the type of assets and liabilities included in each level of the
hierarchy and the corresponding form of valuation:
Quoted market prices (level 1)
This category includes financial instruments with market prices quoted on official markets and those
with dealer price quotations provided by entities that usually disclose transaction prices for these
instruments traded on active markets.
The priority in terms of which price is used is given to those observed on official markets; where there
is more than one official market the choice falls on the main market on which those instruments are
traded.
The Group considers market prices those disclosed by independent entities, assuming that these act
for their own economic benefit and that such prices are representative of the active market, using,
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes whenever possible, prices supplied by more than one entity (for a specific asset and/or liability). For
the process of re-evaluating financial instruments, the Group analyses the various prices in order to
select the one it considers most representative for the instrument under analysis. Additionally, when
they exist, prices relating to recent transactions with similar financial instruments are used as inputs,
being subsequently compared to those supplied by said entities to better justify the option taken by
the Group in favour of a specific price.
This category includes, amongst others, the following financial instruments:
i. Derivatives traded on an organized market;
ii. Shares quoted on a stock exchange;
iii. Open investment funds quoted on a stock exchange;
i. Debt securities valued using non-observable market inputs;
i. Unquoted shares;
i. Closed real estate funds;
i. Hedge funds;
i. Private equities;
i. Restructuring funds; and
i. Over the counter (OTC) derivatives with prices provided by third parties
iv. Closed investment funds whose subjacent assets are solely financial instruments listed on a stock
710. Financial Assets and Liabilities
exchange;
v. Bonds with observable market quotes;
vi. Financial instruments with market offers even if these are not available at the normal information
sources (e.g. securities traded based on recovery rate).
Valuation models based on observable market parameters / prices (level 2)
In this category, the financial instruments are valued using internal valuation techniques, namely
discounted cash flow models and option pricing models which imply the use of estimates and require
judgments that vary in accordance with the complexity of the financial instruments. Notwithstanding,
the Group uses as inputs in its models, observable market data such as interest rate curves, credit
spreads, volatility and market indexes. This category also includes instruments with dealer price
quotations, but which markets have a lower liquidity. Additionally, the Group also uses as observable
market variables, those that result from transactions with similar instruments and that are observed
with a certain regularity on the market.
This category includes, amongst others, the following financial instruments:
i. Bonds without observable market valuations valued using observable market inputs;
i. Derivatives (OTC) over-the-counter valued using observable market inputs; and
i. Unlisted shares valued using internal models using observable market inputs.
Valuation models based on unobservable market parameters (level 3)
This level uses models relying on internal valuation techniques or quotations provided by third parties,
but which imply the use of non-observable market information. The bases and assumptions for the
calculation of fair value are in accordance with IFRS 13.
This category includes, amongst others, the following financial instruments:
The Group initially classifies all of its financial assets based on the business model for managing the
assets and the asset’s contractual terms. This classification determines how the asset is measured
after its initial recognition:
• Amortized cost: if it is held within a business model with the objective to hold financial assets in
order to collect contractual cash flows that are solely payments of principal and interest (SPPI -
solely payments of principal and interest);
• Fair value through other comprehensive income: if it is held within a business model, the objective
of which is achieved by both collecting contractual cash flows and selling financial assets and the
contractual cash flows fall under the scope of SPPI. In addition, upon initial recognition, the Group
may choose to classify irrevocably equity instruments in the fair value through other comprehensive
income portfolio being the changes in the fair value recognized in equity;
• Mandatorily measured at fair value through profit or loss: all cases not within the scope of SPPI;
• Measured at fair value through profit or loss: other financial instruments not included in the business
models described above. If these assets are acquired for the purpose of trading in the short term,
they are classified as held for trading.
7.10.1 Financial assets at amortized cost or accounted at fair value through
other comprehensive income
In accordance with IFRS 9 - Financial Instruments, for a financial asset to be classified and measured at
amortised cost or at fair value through other comprehensive income, it is necessary that:
i. The contractual terms of the financial asset give rise to cash flows that are solely payments of
principal and interest (SPPI - solely payments of principal and interest) on the principal amount
outstanding. Principal, for the purposes of this test is defined as the fair value of the financial
asset at initial recognition. The contractual terms that are SPPI are consistent with a basic lending
arrangement. Contractual terms that introduce exposure to risks or volatility in the contractual cash
flows that are unrelated to a basic lending arrangement, such as exposure to changes in stocks or
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
commodity prices, do not give rise to contractual cash flows that are solely payments of principal
and interest on the amount outstanding. In such cases, the financial asset is required to be measured
at fair value through profit or loss;
The expected credit loss calculation for debt instruments at fair value through other comprehensive
income is explained in Note 7.16. Where the Group holds more than one investment in the same security,
they are deemed to be disposed of on a first–in first–out basis.
ii. The financial asset is held within a business model with the objective to hold financial assets to
maturity to collect contractual cash flows (financial assets at amortised cost) or to collect the
contractual cash flows until maturity and selling the financial asset (financial assets at fair value
through other comprehensive income). The assessment of the business models of the financial asset
is fundamental for its classification. The Group determines the business models by financial asset
groups according to how they are managed to achieve a particular business objective. The Group’s
business models determine whether cash flows will be generated by obtaining only contractual cash
flows, from selling the financial assets or both. At initial recognition of a financial asset, the Group
determines whether it is part of an existing business model or if it reflects a new business model. The
Group reassesses its business models in each reporting period in order to determine whether there
have been changes in business models since the last reporting period.
The above requirements do not apply to lease receivables, which meet the criteria defined in IFRS 16
– Leases.
7.10.3. Equity instruments at fair value through other comprehensive income
Upon initial recognition, the Group occasionally elects to classify irrevocably some of its equity
investments as equity instruments at fair value through other comprehensive income when they meet
the definition of equity under IAS 32 Financial Instruments: Presentation and are not held for trading.
Such classification is determined on an instrument-by-instrument basis.
Gains and losses on these equity instruments are never recycled to profit. Dividends are recognized in
profit or loss as other operating income when the right of the payment has been established, except
when the Group benefits from such proceeds as a recovery of part of the cost of the instrument, in
which case, such gains are recorded in other comprehensive income.
Equity instruments measured at fair value through other comprehensive income are not subject to an
impairment assessment.
Financial assets that are subsequently measured at amortised cost or at fair value through other
comprehensive income are subject to impairment.
7.10.4. Financial assets measured at fair value through profit or loss
At initial recognition, financial assets at amortised cost are recorded at acquisition cost, and
subsequently measured at amortised cost based on the effective interest rate. Interest, calculated at
the effective interest rate, and dividends are recognized in profit or loss.
7.10.2 Debt instruments at fair value through other comprehensive income
The Group classifies debt instruments at fair value through other comprehensive income when both of
the following conditions are met:
• The financial asset is held within a business model, the objective of which is achieved by both
collecting contractual cash flows and selling financial assets;
• The contractual terms of the financial asset give rise to, on specific dates, cash flows that are solely
payments of principal and interests on the principal amount outstanding.
Debt instruments classified as at fair value through other comprehensive income are subsequently
measured at fair value with gains and losses arising due to changes in fair value being recognized in Other
Comprehensive Income, at which point the accumulated value of potential gains and losses recorded in
reserves is transferred to income statement under the caption of gains or losses with financial assets
and liabilities accounted for at fair value through profit or loss. Interest income and foreign exchange
gains and losses are recognised in profit or loss in the same manner as for financial assets measured at
amortized cost as explained in Note 7.2.
Financial assets measured at fair value through profit or loss present the following characteristics:
• contractual cash flows are not SPPI (mandatorily measured at fair value through profit or loss); and/
or
•
it is held within a business model which objective is neither to obtain only contractual cash flows or
to obtain contractual cash flows and sale; or
•
it is designated at fair value through profit or loss as a result of applying the fair value option.
These assets are measured at fair value and the respective revaluation gains or losses are recognized
in the income statement, except for gains and losses arising from changes in the Group’s own credit
risk, the Debt Valuation Adjustment (DVA), which are recognized in other comprehensive income.
novobanco Group does not records any gain arising from own credit risk.
7.10.5. Assets and liabilities held for trading
The Group classifies financial assets or financial liabilities as held for trading when they have been
purchased or issued primarily for short-term profit-making through trading activities or form part of
a portfolio of financial instruments that are managed together, for which there is evidence of a recent
pattern of short-term profit taking.
Held-for-trading assets and liabilities are recorded and measured in the statement of financial position
at fair value. Changes in fair value are recognized in net trading income. Interest and dividend income or
expense is recorded in net trading income according to the terms of the contract, or when the right to
payment has been established.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Included in this classification are debt securities, equities, short positions and customer loans that have
been acquired principally for the purpose of selling or repurchasing in the near term.
7.10.6. Derivative financial instruments and hedge accounting
Classification
The Group classifies its derivative portfolio into (i) fair value hedge and (ii) trading derivatives, which
include, in addition to the trading book, other derivatives contracted for the purpose of hedging certain
assets and liabilities designated at fair value through profit or loss but not classified as hedging (fair
value option).
Recognition and measurement
Derivative financial instruments are initially recognized at their fair value on the date the derivative
contract is entered into (trade date). Subsequent to initial recognition, the fair value of derivative financial
instruments is remeasured on a regular basis and the resulting gains or losses on remeasurement are
recognized directly in the income statement, except for derivatives designated as hedging instruments.
The recognition of the resulting gains or losses arising on the derivatives designated as hedging
instruments depends on the nature of the risk being hedged and the hedge model used.
Derivatives traded on organised markets, namely futures and some options contracts, are recorded as
trading derivatives and their fair value changes are recorded against the income statement. The margin
accounts are included under other assets and other liabilities (see Notes 31 and 35) and comprise the
minimum collateral mandatory for open positions.
The fair value of the remaining derivative financial instruments corresponds to their market value, if
available, or is determined using valuation techniques, including discounted cash flow models and
options pricing models, as appropriate.
Hedge accounting
For the cases in which the Group uses macro hedging, accounting is performed in accordance with IAS
39 (using the policy choice permitted under IFRS 9), with the Group carrying out prospective tests on
the hedge relationship start date, when applicable, and retrospective tests in order to confirm, on each
balance sheet date, the effectiveness of hedging relationships, demonstrating that changes in the fair
value of the hedging instrument are covered by changes in the fair value of the hedged item in the
portion attributed to the hedged risk. Any ineffectiveness found is recognized in the income statement
when it occurs in gains or losses of hedge accounting.
The use of derivatives is framed in the Group’s risk management strategy and objectives.
Fair Value Hedge
In a fair value hedging operation, the carrying value of the hedged asset or liability, determined in
accordance with the respective accounting policy, is adjusted to reflect the changes in its fair value
attributable to the risk being hedged. Changes in the fair value of the derivatives that are designated as
hedging instruments are recorded in the income statement, together with any changes in the fair value
of the hedged asset or liability that are attributable to the risk hedged. In cases where the hedging
instrument covers an equity instrument designated at fair value through other comprehensive income,
changes in fair value are also recognized in other comprehensive income.
If the hedge no longer meets the effectiveness requirement, but the objective of risk management
stays the same, the Group may adjust the hedging operation in order to meet the eligibility criteria
(rebalancing).
If the hedge no longer meets the criteria for hedge accounting (if the hedging instrument expires, is sold,
terminated or exercised, without having been replaced in accordance with the entity’s documented
risk management objective), the derivative financial instrument is transferred to the trading portfolio
and hedge accounting is discontinued prospectively. The cumulative adjustment to the carrying book
value of a hedged asset or liability corresponding to a fixed income instrument, is amortised via the
income statement over the period to its maturity, using the effective interest rate method.
Classification criteria
Derivative financial instruments used for hedging purposes may be classified in the accounts as hedging
instruments provided the following criteria are cumulatively met:
i. Hedging instruments and hedged items are eligible for the hedge relationship;
ii. At the inception of the hedge, the hedge relationship is identified and documented, including
identification of the hedged item and hedging instrument and evaluation of the effectiveness of the
hedge;
iii. There is an economic relationship between the hedged item and the hedging instrument;
iv. The effect of credit risk does not dominate the changes in value that result from this economic
Cash Flow Hedge
When a derivative financial instrument is designated as a hedge against the variability of highly probable
future cash flows, the effective portion of the changes in the fair value of the hedging derivative is
recognized in reserves, being recycled to the income statement in the periods in which the hedged item
affects the income statement. The ineffective portion is recognized in the income statement.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for
hedge accounting, any cumulative gain or loss recognized in reserves at that time is recognized in the
income statement when the hedged transaction also affects the income statement. When a hedged
transaction is no longer expected to occur, the cumulative gain or loss reported in equity is recognized
immediately in the income statement and the hedging instrument is reclassified to the trading portfolio.
relationship;
v. The effectiveness of the hedge can be reliably measured, both at the inception of the hedge and on
an ongoing basis.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Embedded derivatives
If a hybrid contract includes a host contract that is a financial asset under IFRS 9, the Group classifies
the entire contract in accordance with the policy outlined in Note 7.9.
If a hybrid contract includes a host contract that is not an asset under IFRS 9, an embedded derivative
shall be separated from the host contract and accounted for as a derivative under this Standard if, and
only if:
a. The economic characteristics and risks of the embedded derivative are not closely related to the
economic characteristics and risks of the host contract;
b. a separate financial instrument with the same terms as the embedded derivative satisfies the
definition of a derivative; and
c. The hybrid contract is not measured at fair value and changes in fair value are recognized in profit
or loss (a derivative that is embedded in a financial liability at fair value through profit or loss is not
separated).
These embedded derivatives are measured at fair value with the changes in fair value being recognized
in the income statement.
7.10.7. Financial liabilities
An instrument is classified as a financial liability when it contains a contractual obligation to transfer
cash or another financial asset, regardless of its legal form. Financial liabilities are derecognized when
the underlying obligation is liquidated, expires or is cancelled.
Non-derivatives financial liabilities include deposits from banks and customers, loans, debt securities,
subordinated debt and short sales.
These financial liabilities are recognized (i) initially, at fair value less transaction costs and (ii)
subsequently, at amortised cost, using the effective interest rate method, except for short sales and
financial liabilities designated at fair value through profit or loss, which are measured at fair value.
The Group designates, at inception, certain financial liabilities at fair value through profit or loss when:
•
It eliminates or significantly reduces, a measurement or recognition inconsistency (accounting
mismatch) that would otherwise occur;
• The financial liability it’s part of a portfolio of financial assets or financial liabilities or both, managed
and evaluated on a fair value basis, according with the Group’s risk management or investment
strategy; or
• These financial liabilities contain embedded derivatives and IFRS 9 allows designate the entire hybrid
contract at fair value through profit and loss.
Reclassifications between categories of liabilities are not allowed.
The structured products issued by the Group – except for the structured products for which
the embedded derivatives were separated, recorded separately, and revalued at fair value - are
classified under the fair value through profit or loss category because they always meet one of the
abovementioned conditions.
The fair value of listed financial liabilities is their current market bid prices. In the absence of a quoted
price, the Group establishes the fair value by using valuation techniques based on market information,
including the Group issuer’s own credit risk.
Gains or losses arising from the revaluation of liabilities at fair value are recorded in the income
statement. However, the change in fair value attributable to changes in credit risk is recognized in
other comprehensive income. At the time of derecognition of the liability, the amount recorded in other
comprehensive income attributable to changes in credit risk is not transferred to the income statement.
The Group accounts material changes in the terms of an existing liability or part of it as an extinction of
the original financial liability and recognises of a new liability. The terms are assumed to be substantially
different if the present value of the cash flows under the new terms, including any fees paid net of
commissions received, and discounted using the original effective interest rate is at least 10% different
from the discounted present value of the remaining cash flows from the original financial liability. The
difference between the carrying amount of the original liability and the value of the new liability is
recognized in the income statement.
If the Group repurchases debt securities issued, these are derecognized from the balance sheet and the
difference between the carrying book value of the liability and its acquisition cost is recognized in the
income statement.
7.10.8. Financial and performance guarantees
Financial guarantees
Financial guarantee contracts are contracts that require the issuer to make specified payments to
reimburse the holder for a loss due to non-compliance with the contractual terms of a debt instrument,
namely the payment of principal and/or interest.
Financial guarantees are initially recognized in the financial statements at fair value. Financial guarantees
are subsequently measured at the higher of (i) the fair value recognized on initial recognition and (ii) the
amount of any financial obligation arising as a result of guarantee contracts, measured at the balance
sheet date. Any change in the amount of the liability relating to guarantees is taken to the income
statement.
Financial guarantee contracts issued by the Group normally have a stated maturity date and a periodic
fee, usually paid in advance, which varies in function of the counterpart risk, the amount and the time
period of the contract. Consequently, the fair value of the financial guarantee contracts issued by the
Group, at the inception date, is approximately equal to the initial fee received, considering that the
conditions agreed to are market conditions. Hence, the amount recognized at the contract date is
equal to the amount of the commission initially received, which is recognized in the income statement
over the period to which it relates. Subsequent periodic fees are recognized in the income statement in
the period to which they relate.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Performance guarantees
Performance guarantees are contracts that result in the compensation of a party if the other does
not comply with its contractual obligation. Performance guarantees are initially recognized at their fair
value, which is normally evidenced by the amount of the commissions received during the contract
period. When there is a breach of contract, the Group has the right to reverse the guarantee, recognizing
the amounts in Loans and advances to customers after transferring the compensation for the losses to
the collateral taker.
7.11. Reclassifications of financial assets and financial liabilities
If the Group changes a business model, the financial assets included in that model are reclassified and
the classification and measurement requirements for the new category are applied prospectively as
from that date.
7.13. Derecognition
Financial assets are derecognized from the balance sheet when (i) the Group’s contractual rights
relating to the respective cash flows have expired, (ii) the Group has substantially transferred all the
risks and benefits associated with its ownership, or (iii) despite the Group having withholding part, but
not substantially all of the risks and benefits associated with its ownership, control over the assets has
been transferred. When an operation measured at fair value through other comprehensive income is
derecognized, the accumulated gain or loss previously recognized in other comprehensive income is
reclassified to results. In the specific case of equity instruments, the accumulated gain or loss previously
recognized in other equity is not reclassified to profit or loss, being transferred between equity items.
In the specific case of loans to customers, at the time of sale, the difference between the sale value
and the book value must be 100% provisioned, and at the time of the sale, the credit sold will be
derecognized against the funds / assets received. and consequent use of impairment on the balance
sheet.
7.12. Modification of financial assets and financial liabilities
When the contractual cash flows of a financial asset are renegotiated or otherwise modified as a result
of commercial restructuring activity rather than due to credit risk and impairment considerations, the
Group performs an assessment to determine whether the modifications result in the derecognition
of that financial asset. For financial assets, this assessment is based on qualitative factors. When
assessing whether or not to derecognise a loan to a customer, amongst others, the Group considers
the following factors:
• Change in loan currency;
•
Introduction of an equity feature;
• Change in counterparty;
• Whether the modification is such that the instrument would no longer meet the SPPI criterion.
If the modification does not result in cash flows that are substantially different, as set out below, then it
does not result in derecognition. Based on the change in cash flows discounted at the original effective
interest rate, the Group records a modification gain or loss, to the extent that an impairment loss has
not already been recorded. The Group’s accounting policy in respect of forborne loans is set out in note
7.13.
When the modification of the terms of an existing financial liability is not judged to be substantial and,
consequently, does not result in derecognition, the amortised cost of the financial liability is recalculated
by computing the present value of estimated future contractual cash flows that are discounted at the
financial liability’s original EIR. Any resulting difference is recognized immediately as profit or loss. For
financial liabilities, the Group considers a modification to be substantial based on qualitative factors
and if it results in a difference between the adjusted discounted present value and the original carrying
amount of the financial liability of.
7.14. Forborne modified loans
The Group sometimes makes concessions or modifications to the original terms of loans as a response
to the borrower’s financial difficulties, rather than taking possession or to otherwise enforce collection
of collateral. The Group considers a loan forborne when such concessions or modifications are provided
as a result of the borrower’s present or expected financial difficulties and the Group would not have
agreed to them if the borrower had been financially healthy. Indicators of financial difficulties include
defaults on covenants, or significant concerns raised by the Global Risk Department. Forbearance
may involve extending the payment arrangements and/or the agreement of new loan conditions. If
modifications are substantial, the loan is derecognied, as explained in Note 7.12. Once the terms have
been renegotiated without this resulting in the derecognition of the loan, any impairment is measured
using the original effective interest rate as calculated before the modification of terms. The Group
also reassesses whether there has been a significant increase in credit risk, as set out in Note 44 and
whether the assets should be classified as Stage 3.
Derecognition decisions and classification between Stage 2 and Stage 3 are determined on a case-
by-case basis. If these procedures identify a loss in relation to a loan, it is disclosed and managed as an
impaired Stage 3 forborne asset.
Once an asset has been classified as forborne, it will remain forborne for a minimum 24-month probation
period. In order for the loan to be reclassified out of the forborne category, the customer has to meet
all of the following criteria:
• TAll of its facilities have to be considered performing;
• The probation period of two years has passed from the date the forborne contract was considered
performing;
• Regular payments of more than an insignificant amount of principal or interest have been made
during at least half of the probation period;
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes • The customer does not have any contracts that are more than 30 days past due.
7.15. Offsetting of financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there
is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a
net basis, or to realize the asset and settle the liability simultaneously. The legally enforceable right
may not be contingent on future events and must be enforceable in the course of the normal activity
of novobanco Group, as well as in the event of default, bankruptcy or insolvency of the Group or the
counterparty.
7.16. Impairment of Financial Assets
Impairment principles
The Group records impairment allowance for expected credit losses (“ECLs”) for the following debt
instruments:
• Loans and advances to customers;
• Financial and performance guarantees;
•
Import documentary credits;
• Confirmed export documentary credits;
• Undrawn loan commitments;
• Money market exposures;
• Securities portfolio.
Equity instruments are not subject to impairment under IFRS 9.
Debt instruments at amortised cost or at fair value through other comprehensive income are in the
scope of the impairment calculation.
Impairment losses identified are recognized in the income statement and are subsequently reversed
through the income statement if, in a subsequent period, the amount of impairment losses decreases.
Impairment is based on the credit losses expected to arise over the life of the asset (LTECL), unless
there has been no significant increase in credit risk since origination, in which case, the allowance is
based on the 12 months’ expected credit losses.
The 12mECL is the portion of LTECL that represent the ECL that result from default events on a financial
instrument that are possible within the 12 months after the reporting date. Both LTECL and 12mECL are
calculated on either an individual basis or a collective basis, depending on the nature of the underlying
portfolio of financial instruments.
The Group has established a policy to perform an assessment, at the end of each reporting period,
of whether a financial instrument’s credit risk has increased significantly since initial recognition, by
considering the change in the risk of default occurring over the remaining life of the financial instrument.
Based on the above process, the Group groups its loans into Stage 1, Stage 2, Stage 3 and POCI, as
described below:
• Stage 1: When loans are first recognised, the Bank recognises an allowance based on 12mECL. Stage
1 loans also include facilities where the credit risk has improved, and the loan has been reclassified
from Stage 2.
• Stage 2: When a loan has shown a significant increase in credit risk since origination, the Bank
records an allowance for the LTECL. Stage 2 loans also include facilities, where the credit risk has
improved, and the loan has been reclassified from Stage 3.
• Stage 3: Loans considered credit-impaired (as default definition described below). The Group records
an allowance for the LTECL.
• POCI: Purchased or originated credit impaired (POCI) assets are financial assets that are credit
impaired on initial recognition. POCI assets are recorded at fair value at original recognition and
interest income is subsequently recognised based on a credit adjusted EIR. The ECL allowance is
only recognised or released to the extent that there is a subsequent change in the expected credit
losses.
The calculation of ECL
The Group calculates ECL based on four probability-weighted scenarios to measure the expected cash
shortfalls, discounted at an approximation to the EIR. A cash shortfall is the difference between the
cash flows that are due to an entity in accordance with the contract and the cash flows that the entity
expects to receive.
The mechanics of the ECL calculations are outlined below and the key elements are, as follows:
• PD Probability of Default- is an estimate of the likelihood of default over a given time horizon.
A default may only happen at a certain time over the assessed period, if the facility has not been
previously derecognised and is still in the portfolio.
• EAD Exposure at Default - is an estimate of the exposure at a future default date, taking into account
expected changes in the exposure after the reporting date, including repayments of principal and
interest, whether scheduled by contract or otherwise, expected drawdowns on committed facilities,
and accrued interest from missed payments.
• LGD The Loss Given Default - is an estimate of the loss arising in the case where a default occurs
at a given time. It is based on the difference between the contractual cash flows due and those
that the lender would expect to receive, including from the realisation of any collateral or credit
enhancements that are integral to the loan and not required to be recognised separately.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Scenarios
As required by IFRS 9, the impairment assessment of the Group reflects different expectations of
macroeconomic developments, i.e., it incorporates multiple scenarios. In order to incorporate the
effects of future macroeconomic behaviour on loss estimates, forward looking macroeconomic
estimates are included in some of the risk parameters used to calculate impairment. In fact, different
possible scenarios giving rise to the same number of impairment results are considered.
In this context, the process of defining macroeconomic scenarios considers the following principles:
• Representative scenarios that capture the existing non-linearities (e.g. a base scenario, an optimistic
and a pessimistic scenario);
• The base scenario should be consistent with the inputs used in other exercises in the Group (e.g.,
Planning). This is ensured since the option used for the purpose of calculating impairment was
precisely the same methodology that the Group uses in internal and / or regulatory planning
exercises;
• Alternative scenarios to the base scenario should not originate extreme scenarios;
• The correlation between the projected variables should be realistic with the economic reality (e.g. if
GDP is increasing it is expected that unemployment is decreasing).
the scope of the Impairment calculation. The final impairment calculated will thus result from the sum
of the impairment value of each scenario, weighted by the respective probability of execution.
Currently, 3 scenarios are considered for the calculation of impairment on a collective basis: base case,
downside case and an upside case.
The mechanics of the ECL method are summarised below:
• Stage 1: The 12mECL is calculated as the portion of LTECL that represent the ECL that result from
default events on a financial instrument that are possible within the 12 months after the reporting
date. The Bank calculates the 12mECL allowance based on the expectation of a default occurring
in the 12 months following the reporting date. These expected 12-month default probabilities are
applied to a forecast EAD and multiplied by the expected LGD and discounted by an approximation
to the original EIR. This calculation is made for each of the four scenarios, as explained above.
• Stage 2: When a loan has shown a significant increase in credit risk since origination, the Bank
records an allowance for the LTECL. The mechanics are similar to those explained above, including
the use of multiple scenarios, but PDs and LGDs are estimated over the lifetime of the instrument.
The expected cash shortfalls are discounted by an approximation to the original EIR.
• Stage 3: For loans considered credit-impaired, the Bank recognises the lifetime expected credit
losses for these loans. The method is similar to that for Stage 2 assets, with the PD set at 100%.
The exercise of build the base and alternative macroeconomic scenarios for the Portuguese economy
is based on a combination of econometric forecasts, information on forecasts from other external
institutions and application of subjective expert judgment.
• POCI assets are financial assets that are credit impaired on initial recognition. The Bank only
recognises the cumulative changes in lifetime ECL since initial recognition, based on a probability-
weighting of the four scenarios, discounted by the credit-adjusted EIR.
In the first component, GDP growth is estimated through estimates for the growth of expenditure
components, obtaining GDP through the formula GDP = Consumption + Investment + Exports - Imports.
The econometric specifications chosen are those that, after testing different alternatives, generate
the best result.
The econometric estimates thus obtained are then weighted with forecasts from external institutions,
according to the principle that the combination of different projections tends to be more accurate than
just a forecast (the risk of errors and bias associated with specific methods and variables is minimized).
The forecasts for prices (consume and real estate) and unemployment follow a similar methodology:
own forecasts based on an estimated model, weighted with forecasts from external institutions,
if available. In a base scenario, the projections for interest rates start from market expectations
(provided by Bloomberg), with possible adjustments in accordance with the principles defined above,
if considered appropriate (weighting by expert judgment and forecasts from external institutions).
The alternative scenarios are based on the historical observation of deviations from the trend in GDP
behavior (cost and contraction cycles), the reference of EBA recommendations for extreme adverse
scenarios, the stylized facts of economic cycles, with respect to the components of expenditure,
prices, unemployment, etc. and estimates.
• When estimating LTECL for undrawn loan commitments, the Bank estimates the expected portion
of the loan commitment that will be drawn down over its expected life. The ECL is then based on
the present value of the expected shortfalls in cash flows if the loan is drawn down, based on a
probability-weighting of the four scenarios. The expected cash shortfalls are discounted at an
approximation to the expected EIR on the loan.
• For credit cards and revolving facilities that include both a loan and an undrawn commitment, ECL
is calculated and presented together with the loan. For loan commitments and letters of credit, the
ECL is recognised within Provisions.
The ECL for debt instruments measured at fair value through other comprehensive income do not reduce
the carrying amount of these financial assets in the statement of financial position, which remains at
fair value. Instead, an amount equal to the allowance that would arise if the assets were measured
at amortised cost is recognised in OCI as an accumulated impairment amount, with a corresponding
charge to profit or loss. The accumulated loss recognised in OCI is recycled to the profit and loss upon
derecognition of the assets.
For POCI financial assets, the Group only recognises the cumulative changes in LTECL since initial
recognition in the loss allowance.
Thus, when revising / updating the scenarios, the respective probabilities of execution are also reviewed.
Once the scenarios are updated, the values of the risk parameters are updated for later consideration in
The ongoing assessment of whether a significant increase in credit risk has occurred for revolving
facilities is similar to other lending products. This is based on shifts in the customer’s internal credit
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes grade, but greater emphasis is also given to qualitative factors such as changes in usage. The interest
rate used to discount the ECL for credit cards is based on the average effective interest rate that is
expected to be charged over the expected period of exposure to the facilities. This estimation takes into
account that many facilities are repaid in full each month and are consequently not charged interest.
The calculation of ECL, including the estimation of the expected period of exposure and discount rate
is made, on an individual basis for corporate and on a collective basis for retail products. The collective
assessments are made separately for portfolios of facilities with similar credit risk characteristics.
Individual impairment analysis process
The Individual Credit Analysis comprises a staging analysis and an individual impairment quantification
analysis. The staging analysis is performed for debtors previously classified as stage 1 and stage 2, with
the purpose of evaluating the adequacy of the assigned stage with additional information obtained
on an individual basis. The individual impairment quantification analysis aims to determine the most
appropriate impairment rate for each credit customer, regardless of the amount resulting from the
Collective Impairment Model. Clients that have been subject to Individual Analysis, but for which an
objective impairment loss was not considered, are again included in the Collective Impairment Model.
The Individual Analysis of the selected clients is carried out based on the information provided by the
Commercial Structures regarding the client / Group’s framework, historical and forecast cash flows
(when available) and existing collateral.
7.17. Collateral and financial guarantees valuation
To mitigate its credit risks on financial assets, the Group seeks to use collateral, where possible. The
collateral comes in various forms, such as cash, securities, letters of credit/guarantees, real estate,
receivables, inventories, other non-financial assets and credit enhancements such as netting
agreements. Collateral, unless repossessed, is not recorded on the Bank’s statement of financial
position. Collateral is generally assessed, at a minimum, at inception and re-assessed on a quarterly
basis. However, some collateral, for example, cash or securities relating to margining requirements, is
valued daily. To the extent possible, the Bank uses active market data for valuing financial assets held
as collateral. Other financial assets which do not have readily determinable market values are valued
using models. Non-financial collateral, such as real estate, is valued based on data provided by third
parties such as mortgage brokers or based on housing price indices.
estate property that is not essential to their installation and daily operations and the pursuit of their
object (No. 1 of article 112 of RGICSF), being able to acquire, however, real estate property in exchange
for loans granted by same. This real estate property must be sold within 2 years, period which may,
based on reasonable grounds, be extended by Bank of Portugal, on the conditions to be determined by
this Authority (article 114 of RGICSF).
Although the Group’s objective is to immediately dispose of all real estate property acquired as payment
in kind for loans, during financial year 2016 the Group changed the classification of this real estate
properties from Non-current assets held for sale to Other assets (and to Investment properties, in the
case of assets owned by investment funds or real estate properties leased out), due to the permanence
of same in the portfolio exceeding 12 months. However, the accounting method has not changed, these
being initially recognized at the lower of their fair value less costs to sell and the carrying amount of
the subjacent loans. Subsequently, these real estate properties are measured at the lower of its initial
carrying amount and the corresponding fair value less costs to sell and it is not depreciated. For real
estate properties recorded in the balance sheet of novobanco and of the remaining credit institutions
integrating the consolidation perimeter of the Group, the amount recoverable from their immediate
sale is considered to be their respective fair value. For real estate properties held by investment funds,
and in accordance with Law No. 16/2015, of February 24, fair value is determined as the average
between two valuations, obtained from independent entities, determined at the best price that could
be obtained if it were put up for sale under normal market conditions at the time of valuation, which is
reviewed at least annually or, in the case of open investment funds, with the frequency of redemption,
and whenever acquisitions or disposals occur or when significant changes in the value of the real estate
property occur. The market value of properties for which a promissory purchase and sale agreement
was entered into corresponds to the value of that agreement.
The valuation of these real estate properties is performed in accordance with one of the following
methodologies, applied in accordance with the specific situation of the asset:
• (i) Market Method
The Market Comparison Criteria takes as a reference transaction values of similar and comparable real
estate properties to the real estate property under valuation, obtained through market prospection
carried out in the zone.
• (iI) Income Method
Under this method, the real estate property is valued based on the capitalization of its net income,
discounted to the present using the discounted cash-flow method.
• (iii) Cost Method
7.18. Foreclosed properties and non-current assets held for sale
In the scope of its loan granting activity, the Group incurs in the risk of the borrower failing to repay all
the amounts due. In case of loans and advances with mortgage collateral, the Group executes these
and receives real estate properties resulting from foreclosure. Due to the provisions of the General Law
on Credit Institutions and Financial Companies (“Regime Geral das Instituições de Crédito e Sociedades
Financeiras” (RGICSF)), banks are prevented, unless authorised by Bank of Portugal, from acquiring real
This method aims to reflect the current amount that would be required to substitute the asset in its
present condition, separating the value of the real estate property into its fundamental components:
Urban Ground Value and Urbanity Value; Construction Value; and Indirect Costs Value.
Valuations carried out are performed by independent entities specialized in these services. The valuation
reports are analysed internally, namely comparing the sales values with the revalued amounts of the
assets so as to assess the parameters and process adequacy with the market evolution.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Additionally, since these are assets whose fair value level in the hierarchy of IFRS 13 mostly corresponds
to level 3, given the subjectivity of some assumptions used in the valuations and the fact that there are
external indications with alternative values, the Group proceeds to analysis on the assumptions used,
which may imply additional adjustments to their fair value, supported by additional internal or external
valuations.
For assets of greater relevance, the challenge of the appraisals that serve as a basis for the valuation
of the real estate assets is carried out by a specialized area of the Group that is independent of this
valuation process, in accordance with an annual work plan previously approved by the Executive Board
of Directors.
Non-current assets or disposal groups (groups of assets to be disposed of together and the related
liabilities that include at least one non-current asset) are classified as held for sale when their carrying
values will be recovered mainly through a sale transaction (including those acquired exclusively with a
view to their subsequent disposal), the assets or disposal groups are available for immediate sale and
the sale is highly probable (within the period of one year).
Immediately before the initial classification as held for sale, the measurement of the non-current
assets (or of all the assets and liabilities in a disposal group) is brought up to date in accordance with
the applicable IFRS. Subsequently, these assets or disposal groups are remeasured at the lower of
their carrying value and fair value less costs to sell. Where the carrying value of non-current assets
corresponds to fair value less costs to sell, the fair value level of the IFRS 13 hierarchy corresponds
mostly to Level 3.
Assets / liabilities of subsidiaries acquired for resale purposes reflect, essentially, assets and liabilities
of subsidiaries acquired by the Group in the scope of loan restructuring operations, for which the
Group’s objective is their subsequent disposal within one year. Since these acquisitions arise from loan
restructuring operations, they are recognized at their fair value, and any differences between their fair
values and those of the extinguished loans following the acquisitions, are recognized as impairment
losses on loans and advances. On the acquisition of an entity meeting the subsidiary criteria and for
which the Group’s objective is its resale, it is consolidated in accordance with the applicable procedures
adopted by the Group and its assets and liabilities are measured at fair value at the acquisition date.
However, in these specific cases, the assets are classified as non-current assets held for sale and the
liabilities are classified as non-current liabilities held for sale. Consequently, and at the first consolidation
date, the net value of the assets and liabilities of the subsidiary reflects their fair value determined at
the acquisition date (which results from the loan restructuring operation).
These subsidiaries are consolidated until their effective sale. At each balance sheet date, the net
carrying book value of their assets and liabilities is compared with their fair value, less costs to sell,
and impairment losses are recognized when necessary. Assets and liabilities relating to discontinued
operations are recorded in accordance with the valuation policies applicable to each category of assets
and liabilities, as set down in IFRS 5, according to the IAS/IFRS applicable to the respective assets and
liabilities.
For purposes of determining the fair value of subsidiaries held for resale, the Group adopts the following
methodologies:
no caso de subsidiárias cujos ativos são formados predominantemente por bens imobiliários, o seu
justo valor é determinado por referência ao valor desses ativos com base em avaliações efetuadas por
peritos independentes;
• for subsidiaries which assets comprise fundamentally real estate, their fair value is determined with
reference to the value of those assets, which is based on valuations performed by independent
specialised entities;
• for the remaining entities, their fair value is determined based on the discounted cash flow
methodology, using assumptions consistent with the business risks of each of the subsidiaries
under valuation. If these subsidiaries cease to comply with the conditions necessary to be recorded
as non-current assets held for sale in accordance with IFRS 5, their assets and liabilities are fully
consolidated in the respective asset and liability captions, in accordance with that provided for in
Note 29.
7.19. Investment properties
The Group classifies as investment properties the real estate assets held to earn rentals or for capital
appreciation or both. Investment properties are initially recognized at acquisition cost, including directly
attributable transaction costs, and subsequently at their fair value. Changes in fair value determined at
each balance sheet date are recognized in the income statement, under the caption Other operating
income and expenses, based on periodic valuations performed by independent entities specialised in
this type of service. Investment properties are not depreciated.
Since these are assets whose fair value level in the hierarchy of IFRS 13 mostly corresponds to level 3,
given the subjectivity of some assumptions used in the valuations and the fact that there are external
indications with alternative values, the Group proceeds to analysis on the assumptions used, which may
imply additional adjustments to their fair value, supported by additional internal or external valuations.
Reclassifications to and from the caption Investment properties may occur whenever a change in
respect of the use of a real estate property is verified. On the reclassification of investment properties
to real estate properties held for own use, the estimated cost, for accounting purposes, is the fair
value, at the date of the change in usage. If a real estate property held for own use is reclassified to
investment properties, the Group records that asset in accordance with the policy applicable to real
estate properties held for own use, up to the date of its reclassification to investment properties and at
fair value subsequently, with the difference arising in its measurement at the date of the reclassification
being recognized in revaluation reserves. If a real estate property is transferred from other assets to
investment properties, any difference between the fair value of the asset at that date and the previous
carrying book value is recognized in the income statement.
Subsequent expenditure is capitalised only when it is probable that the Group will obtain future
economic benefits in excess of those originally estimated based on the performance of the asset.
Gains and losses on the disposal of investment properties resulting from the difference between the
realised value and the carrying book value are recognized in the income statement for the year under
the caption Other operating income and expenses. Gains and losses on the disposal of investment
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes properties resulting from the difference between the realised value and the carrying book value are
recognized in the income statement for the year under the caption Other operating income or Other
operating expenses.
Investment properties recorded relate solely to non-banking activities (Investment Funds and Real
Estate Companies).
7.20. Write-offs
Write-off is defined as the derecognition of a financial asset from the Group’s balance sheet, which
should only occur when cumulatively:
i. The total amount of the credit has been demanded, that is, the credit must be fully recognized
(totally or partially) as overdue credit. Exemptions from this requirement are (i) debt restructuring/
pardon carried out within the scope of extra-judicial, PER and Insolvency agreements, in which part
of the credit may remain performing and the remainder of the debt will be written off by judicial/
extra-judicial decision and (ii) situations in which that despite the contract not having expired in its
entirety, the Group understands that it is facing a scenario of total or partial loss;
ii. All the recovery efforts, considered appropriate, have been developed (and the relevant evidence
gathered);
iii. The credit recovery expectations are very low, being necessary that the amount to be written
off (whether total or partial write-off of the debt) to be fully covered by impairment and under
management by the central credit recovery application. It is necessary to ensure that the amount
to be written off from the asset is 100% impaired (constituted at least in the month prior to the
write-off); and
iv. A final agreement has been obtained as part of a restructuring process and the remaining debt can
no longer be recovered.
Subsequent payments received after the write-off must be recognized as subsequent write-off
recoveries at other operating income.
7.21. Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise balances with a
maturity of less than three month from the date of acquisition / contracting and whose risk of change
in value is immaterial, including cash, deposits with Central Banks and deposits with other credit
institutions. Cash and cash equivalents exclude restricted balances with Central Banks.
7.22. Assets sold with repurchase agreements, securities loaned
and short sales
Securities sold subject to repurchase agreements (repos) at a fixed price or at a price that corresponds
to the sales price plus a lender’s return are not derecognized from the balance sheet. The corresponding
liability is included under amounts due to banks or to customers, as appropriate. The difference between
the sale and repurchase price is treated as interest and deferred over the life of the agreement, using
the effective interest rate method.
Securities purchased under agreements to resell (reverse repos) at a fixed price or at a price that
corresponds to the purchase price plus a lender’s return are not recognized in the balance sheet, the
purchase price paid being recorded as loans and advances to banks or customers, as appropriate. The
difference between the purchase and resale price is treated as interest and deferred over the life of the
agreement, using the effective interest rate method.
Securities ceded under loan agreements are not derecognized in the balance sheet, being classified and
measured in accordance with the accounting policy described in Note 7.10. Securities received under
borrowing agreements are not recognized in the balance sheet.
Short sales correspond to securities sold that are not included in the Group’s assets. They are recorded
as financial liabilities held for trade, at the fair value of the assets to be returned in the scope of the
repurchase agreement. Gains and losses resulting from the change in their respective fair value are
recognized directly in the income statement in Gains or Losses from financial assets and liabilities held
for trading.
7.23. Property, plant and equipment
The Group’s property, plant and equipment are measured at cost less accumulated depreciation and
impairment losses. The cost includes expenditure that is directly attributable to the acquisition of the
assets.
Subsequent costs with property, plant and equipment are only recognized when it is probable that
future economic benefits associated with them will flow to the Group. All repair and maintenance costs
are charged to the income statement during the period in which they are incurred, on the accrual basis.
Land is not depreciated. The depreciation of property, plant and equipment is calculated using the
straight-line method, at the following depreciation rates that reflect their estimated useful lives:
Self-Service buildings
Leasehold improvements
IT equipment
Furniture and fixtures
Interior installations
Security equipment
Machines and tools
Transport equipment
Other equipment
Number of years
35 to 50
10
4 to 8
4 to 10
5 to 10
4 to 10
4 to 10
4
5
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes The useful lives and residual values of property, plant and equipment are reviewed at each reporting
date.
When there is an indication that an asset may be impaired, IAS 36 requires its recoverable amount to be
estimated and an impairment loss recognized when the book value of the asset exceeds its recoverable
amount. Impairment losses are recognized in the income statement, being reversed in subsequent
periods, when the reasons that led to their initial recognition cease to exist. For this purpose, the new
depreciated amount shall not exceed that which would be recorded had the impairment losses not
been imputed to the asset but considering the normal depreciation the asset would have been subject
to.
The recoverable amount is determined as the lower of its net selling price and its value in use, which is
based on the net present value of the estimated future cash flows arising from the continued use and
ultimate disposal of the asset at the end of its useful life.
On the date of the derecognition of a tangible fixed asset, the gain or loss determined as the difference
between the net selling price and the net carrying book value is recognized under the caption Other
operating income or Other operating expenses.
7.24. Leases
Lease Definition
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.
As lessee
As a lessee, the Group leases various assets, including real estate, vehicles and IT equipment. The
Group recognises lease liabilities to make lease payments and right-of-use assets representing the
right to use the underlying assets.
As previously mentioned, the Group has opted not to recognize assets under right of use and liabilities for
short-term leases, with a lease term of 12 months or less, and low value asset leases (e.g. IT equipment)
with a new value of less than Euro 5 thousand. The Group recognizes the lease payments associated
with these leases as expenses on a straight-line basis over the lease term in income statement as
“Other administrative expenses – rents and rentals”.
The Group presents assets under right of use that do not fit the definition of investment property as
“tangible fixed assets”, in the same line as the underlying assets of the same nature that they own.
Right-of-use assets that fall under the definition of investment property are presented as investment
property. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes
the amount of lease liabilities recognised, initial direct costs incurred and less any lease incentives
received.
The Group presents the lease liabilities under “Other liabilities” in the statement of financial position.
The lease liability corresponds to the present value of the future cash flows to be paid during the lease
contract. The lease rents include fixed amounts, variable amounts that depend on an interest rate,
amounts to be payable relating to guarantees on the residual value of the asset. Any options are also
included if they are reasonably expected to be exercised.
Variable amounts that do not depend on interest rate are recognized as cost in the period to which they
relate. During the lease period, the lease liability increases by the interest accrual and decreases by the
lease rents payment. The value of the lease liability changes if the terms of the lease (such as the term
or the value of the index) change or if the valuation of the exercise of the option to acquire the asset
changes.
As Lessor
Financial leases
Transactions in which the risks and benefits inherent in the ownership of an asset are substantially
transferred to the lessee are classified as finance leases. Financial leasing contracts are recorded in the
balance sheet as credits granted for an amount equivalent to the net investment made in the leased
assets, together with any estimated non-guaranteed residual value. Interest included in rents charged
to customers is recorded as income while capital amortizations, also included in rents, are deducted
from the amount of credit granted to customers. The recognition of interest reflects a constant periodic
rate of return on the lessor’s remaining net investment.
Operating leases
All lease transactions that do not fall under the definition of finance lease are classified as operating
leases.
Receipts relating to these contracts are recognized on a straight-line basis over the lease term and
recorded in “Other operating income”.
7.25. Intangible assets
The costs incurred with the acquisition, production and development of software are capitalised, as
are additional costs incurred by the Group to implement said software. These costs are amortised on a
straight-line basis over their expected useful lives, which usually range between 3 and 6 years.
Costs that are directly associated with the development of specific software applications, that will
probably generate economic benefits beyond one financial year, are recognized and recorded as
intangible assets.
All remaining costs associated with information technology services are recognized as an expense as
incurred.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes 7.26. Impairment of non-financial assets
7.27. Employee Benefits
The Group assesses, at each reporting date, whether there is an indication that an asset may be
impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group
estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asse or
cash generating unit fair value less costs of disposal and its value in use. The recoverable amount is
determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. When the carrying amount of an asset or
cash generating unit exceeds its recoverable amount, the asset is considered impaired and is written
down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset. In determining fair value less costs of disposal, recent market transactions
are taken into account. If no such transactions can be identified, an appropriate valuation model
is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly
traded companies or other available fair value indicators.
The Group bases its impairment calculation on most recent budgets and forecast calculations, which
are prepared separately for each of the Group’s cash generating units to which the individual assets are
allocated. These budgets and forecast calculations generally cover a period of five years. A long-term
growth rate is calculated and applied to project future cash flows after the fifth year (perpetuity).
Impairment losses of continuing operations are recognised in the statement of profit or loss in expense
categories consistent with the function of the impaired asset, except for properties previously
revalued with the revaluation taken to OCI. For such properties, the impairment is recognised in other
comprehensive income up to the amount of any previous revaluation.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether
there is an indication that previously recognised impairment losses no longer exist or have decreased.
If such indication exists, the Group estimates the asset’s or cash generating unit recoverable amount.
A previously recognised impairment loss is reversed only if there has been a change in the assumptions
used to determine the asset’s recoverable amount since the last impairment loss was recognised. The
reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor
exceed the carrying amount that would have been determined, net of depreciation, had no impairment
loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit
or loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a
revaluation increase.
Intangible assets with indefinite useful lives are tested for impairment annually at the cash generating
unit level, as appropriate, and when circumstances indicate that the carrying value may be impaired.
Pensions
Pursuant to the signature of the Collective Labour Agreement (“Acordo Coletivo de Trabalho” (ACT))
for the banking sector and its subsequent amendments resulting from the 3 tripartite agreements
described in Note 17, pension funds and other mechanisms were set up to cover liabilities assumed
with pensions on retirement, disability, survival and health-care benefits.
The liabilities’ coverage is assured, for most of the Group companies, by pension funds managed by
GNB - Sociedade Gestora de Fundos de Pensões, SA, a subsidiary of the Group.
The pension plans of the Group are defined benefit plans, as they establish the criteria to determine
the pension benefit to be received by employees during retirement, usually dependent on one or more
factors such as age, years of service and salary level.
The retirement pension liabilities are calculated semi-annually, in 31 December and 30 June of each
year, for each plan individually, using the Projected Unit Credit Method, being annually reviewed by
qualified independent actuaries. The discount rate used in this calculation is determined with reference
to market rates associated with high-quality corporate bonds, denominated in the currency in which
the benefits will be paid out and with a maturity similar to the expiry date of the plan’s liabilities.
The Group determines the net interest income / expense for the period incurred with the pension plan
by multiplying the plan’s net assets / liabilities (liabilities net of the fair value of the fund’s assets) by
the discount rate used to measure the retirement pension liabilities referred to above. On that basis,
the net interest income / expense was determined based on the interest cost on the retirement
pension liabilities net of the expected return on the funds’ assets, both calculated using the discount
rate applied in the determination of the retirement pension liabilities.
Re-measurement gains and losses, namely (i) actuarial gains and losses arising due to differences
between actuarial assumptions used and real values verified (experience adjustments) and changes
in actuarial assumptions and (ii) gains and losses arising due to the difference between the expected
return on the fund’s assets and the actual investment returns, are recognized in equity under the
caption other comprehensive income.
The Group recognizes as a cost in the income statement a net total amount that includes (i) current
service costs, (ii) net interest income / expense with the pension fund, (iii) the effect of early retirement,
(iv) past service costs, and (v) the effect of settlements or curtailments occurring during the period.
The net interest income / expense with the pension plan is recognized as interest income or interest
expense, depending on its nature. Early retirement costs correspond to increases in liabilities due to
employees retiring before turning 65 (normal retirement age foreseen in the ACTV) and which forms
the basis of the actuarial calculation of pension fund liabilities. Whenever the possibility of the early
retirement provided for in the pension fund regulation is invoked, the responsibilities of same must
be incremented by the value of the actuarial calculation of the liabilities corresponding to the period
between the early retirement and the employee turning 65.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes The Group makes payments to the funds to assure their solvency, the minimum levels set by Bank of
Portugal being: (i) the liability with pensioners must be totally funded at the end of each period, and
(ii) the liability relating to past service costs for active employees must be funded at a minimum level
of 95%.
• Profit-sharing and bonus plans
The Group recognizes the cost expected with profit-sharing pay-outs and bonuses when it has a
present, legal or constructive, obligation to make such payments as a result of past events and can
make a reliable estimate of the obligation.
The Group assesses the recoverability of any excess in a fund regarding he retirement pension liabilities,
based on the expectation of reductions in future contributions.
Health-care benefits
The Group provides to its banking employees health-care benefits through a specific Social-Medical
Assistance Service. This Social-Medical Assistance Service (SAMS) is an autonomous entity which is
managed by the respective Union.
SAMS provides its beneficiaries services and/or contributions with medical assistance expenses,
diagnostics, medication, hospitalization, and surgeries, in accordance with its funding availability and
internal regulations.
Arising from the signature of the new Collective Labour Agreement (ACT) on 5 July 2016, published in
Labour Bulletin (Boletim do Trabalho) No. 29, of 8 August 2016, the Group’s contributions to SAMS,
correspond to a monthly fixed amount (as per Annex VI of the new ACT) for each employee, 14 times a
year, recorded on a monthly basis in personnel costs, while the component to be paid by the employee
is discounted monthly in the processing of salary, against the caption Amounts payable (SAMS).
The calculation and recognition of the Group’s liability with post-retirement health-care benefits
is similar to the calculation and recognition of the pension liability described above. These benefits
are covered by the Pension Fund, which presently covers all liabilities with pensions and health-care
benefits (defined benefit plan).
Career bonus
The ACT provides for the payment by the Group of a career bonus, due at the time immediately prior to
the employee’s retirement if he retires at the Group’s service, corresponding to 1.5 of his salary at the
time of payment.
These long-term service bonuses were accounted for by the Group in accordance with IAS 19, as
other long-term employee benefits. The Group’s liability with these long-term service bonuses were
periodically estimated by the Group using the Projected Unit Credit Method. The actuarial assumptions
used were based on expectations as to future salary increases and mortality tables. The discount rate
used in this calculation was determined using the methodology described for retirement pensions. In
each period, the increase in the liability for long-term service bonuses, including actuarial gains and
losses and past service costs, was charged to the income statement, in Personnel Expenses.
Employees’ variable remuneration and other obligations
The Group recognises under costs the short-term benefits paid to employees who were at its services
in the respective accounting period.
• Obligations with holidays, holiday subsidy and Christmas subsidy
In accordance with the legislation in force in Portugal, employees are annually entitled to one month
of holidays and one month of holiday subsidy, this being a right acquired in the year prior to their
payment. In addition, employees are annually entitled to one month of Christmas subsidy, which
right is acquired throughout the year and settled during the month of December of each calendar
year. Hence, these liabilities are recorded in the period in which the employees acquire the right to
same, regardless of the date of their respective payment.
7.28. Provisions and Contingent liabilities
Provisions are recognized when: (i) the Group has a current legal or constructive obligation, (ii) it is
probable that its settlement will be required in the future and (iii) a reliable estimate of the obligation
can be made.
Provisions related to legal cases opposing the Group to third parties, are constituted according to
internal risk assessments made by Management, with the support and advice of its internal or external
legal advisors.
When the effect of the passage of time (discounting) is material, the provision corresponds to the net
present value of the expected future payments, discounted at an appropriate rate considering the risk
associated with the obligation. In these cases, the increase in the provision due to the passage of time
is recognized in financial expenses.
Restructuring provisions are recognized when the Group has approved a formal, detailed restructuring
plan and such restructuring has either commenced or has been publicly announced.
A provision for onerous contracts is recognized when the benefits expected to be derived by the Group
from a contract are lower than the unavoidable costs of meeting its obligation under the contract.
This provision is measured at the present value of the lower of the estimated cost of terminating the
contract and the estimated net costs of continuing the contract.
If a future outflow of funds is not probable, this situation reflects a contingent liability. Contingent
liabilities are always disclosed, except when the likelihood of their occurrence is remote.
7.29. Income taxes
novobanco and its subsidiaries are subject to the tax regime consigned in the Código do Imposto sobre
o Rendimento das Pessoas Coletivas (IRC Code).
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Corporate income tax comprises current tax and deferred tax.
Corporate income tax is recognized in the income statement except to the extent that it relates to
items recognized directly in equity, in which case it is recognized under equity. Corporate income tax
recognized directly in equity relating to fair value remeasurement of financial assets at fair value
through other comprehensive income and cash flow hedges is subsequently recognized in the income
statement when the gains or losses giving rise to said income tax are also recognized in the income
statement.
Current tax
Current tax is the tax expected to be paid on the taxable profit for the year, calculated using tax rules
and tax rates enacted or substantively enacted in each jurisdiction and any adjustments to prior period
taxes. The tax is recognized in each financial reporting period based on management estimates as
regards the average effective tax rate foreseen for the entire fiscal year.
Current tax is calculated based on taxable income for the period, which differs from the accounting
result due to adjustments resulting from expenses or income not relevant for tax purposes or which will
only be considered in subsequent years.
Deferred tax
Deferred tax is calculated on timing differences arising between the carrying book values of assets
and liabilities for financial reporting purposes and their respective tax base and is calculated using the
tax rates enacted or substantively enacted at the balance sheet date in each jurisdiction and that are
expected to apply when the timing differences are reversed.
Deferred tax liabilities are recognized for all taxable timing differences except for: i) goodwill non-
deductible for tax purposes; ii) differences arising on the initial recognition of assets and liabilities that
neither affect the accounting nor taxable profit; iii) that do not result from a business combination,
and iv) differences relating to investments in subsidiaries to the extent that they will probably not
reverse in the foreseeable future and the Group does not control the timing of the reversal of the timing
differences. Deferred tax assets are recognized to the extent that it is probable that future taxable
profits will be available against which the deductible timing differences can be offset. Deferred tax
liabilities are always accounted for, regardless of the performance of Group.
The taxable profit or tax loss determined by the Group can be adjusted by the Portuguese Tax Authorities
within a period of four years, except in the case of any deduction or use of tax credit, in which the expiry
period is the exercise of that right (5 or 12 years in the case of tax losses, depending on the year). The
Executive Board of Directors considers that any corrections, resulting mainly from differences in the
interpretation of tax legislation, will not have a materially relevant effect on the financial statements.
The Group, as established in IAS 12, paragraph 74, offsets deferred tax assets and liabilities whenever
(i) it has the legally enforceable right to offset current tax assets and current tax liabilities; and (ii)
they relate to corporate income taxes levied by the same Taxation Authority, on the same tax entity
or different taxable entities that intent to settle current tax liabilities and assets on a net basis, or to
realize the assets and settle the liabilities simultaneously, in each future period in which the deferred
tax liabilities or assets are expected to be settled or recovered.
The Bank complies with the guidelines of IFRIC 23 - Uncertainty on the Treatment of Income Tax with
regard to the determination of taxable profit, tax bases, tax losses to be reported, tax credits to be
used and tax rates in scenarios of uncertainty regarding the treatment of income tax, with no material
impact on its financial statements resulting from its application.
7.30. Treasury shares
Own equity instruments of the Bank which are acquired by it or by any of its subsidiaries (treasury
shares) are deducted from equity. Consideration paid or received on the purchase, sale, issue or
cancellation of the Bank’s own equity instruments is recognised directly in equity. No gain or loss is
recognised in profit or loss on the purchase, sale, issue or cancellation of own equity instruments. As at
31 December 2021, the Bank or the Group does not hold own equity instruments.
7.31. Disintermediation
The Group provides trust and other fiduciary services that result in the holding or investing of assets
on behalf of its clients. Assets held in a fiduciary capacity, unless recognition criteria are met, are not
reported in the financial statements, as they are not assets of the Group.
7.32. Dividends on ordinary shares
Dividends on ordinary shares are recognised as a liability and deducted from equity when they are
approved by the Bank’s shareholders. Interim dividends are deducted from equity when they are
declared and are no longer at the discretion of the Bank.
Dividends for the year that are approved after the reporting date are disclosed as an event after the
reporting date.
7.33. Equity Reserves
The reserves recorded in equity on the Group’s statement of financial position include:
• Other Comprehensive Income:
– Fair value reserves which comprises: (i) The cumulative net change in the fair value of debt
instruments classified at fair value through other comprehensive income, less the allowance
for expected credit loss, when applicable; (ii) The cumulative net change in fair value of equity
instruments at fair value through other comprehensive income;
– o Impairment reserves of debt instruments classified at fair value through other comprehensive
income;
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes – o Reserves associated with sales of equity instruments classified as fair value through other
comprehensive income, which include the proceeds from sales of these securities;
7.34. Earnings per share
– o Actuarial deviation reserves that correspond to actuarial gains and losses, resulting from
differences between the actuarial assumptions used and the values actually verified (experience
gains and losses) and from changes in actuarial assumptions and the gains and losses arising from
the difference between the income expected from the fund’s assets and the values obtained;
– o Own credit revaluation reserve, which comprises the cumulative changes in the fair value of
the financial liabilities designated at fair value through profit or loss attributable to changes in the
Group’s own credit risk
– o Cash flow hedge reserve, which comprises the portion of the gain or loss on a hedging instrument
in a cash flow hedge that is determined to be an effective hedge
– o Foreign currency translation reserve, which is used to record exchange differences arising from
the translation of the net investment in foreign operations, net of the effects of hedging
– o Other capital reserve, which includes the portion of compound financial liabilities that qualify
Basic earnings per share are calculated by dividing the net income attributable to the shareholders of
the parent company by the weighted average number of ordinary shares outstanding during the period.
For the calculation of diluted earnings per share, the weighted average number of ordinary shares
outstanding is adjusted to reflect the impact of all potential dilutive ordinary shares, such as those
resulting from convertible debt and share options granted to employees. The dilution effect translates
into a decrease in earnings per share, based on the assumption that the convertible instruments will be
converted, or the options granted exercised.
7.35. The accounting standards and interpretations
The accounting standards and interpretations recently issued but not yet effective and that the Group
has not yet applied in the preparation of its financial statements may be analysed as follows:
for treatment as equity
Standards, interpretations, amendments and revisions that become effective in future years:
• Retained earnings, which corresponds to earnings of the Group carried over from previous years;
• Other reserves (originary reserve, special reserve and other reserves).
The following standards, interpretations, amendments and revisions, with mandatory application in
future financial years, have not been, until the date of approval of these financial statements, adopted
(“endorsed”) by the European Union:
Norm / Interpretation
Applicable in the European
Union for fiscal years beginning
on or after
Description
Amendments to IFRS 3 - References to the Framework
for Financial Reporting
1-jan-2022
This amendment updates the references to the Framework in the text of IFRS 3, with no changes being made to the accounting requirements for business combinations.
It also clarifies the accounting treatment to be adopted in respect of liabilities and contingent liabilities under IAS 37 and IFRIC 21, incurred separately versus those included in a business
combination.
The amendment is of prospective application.
Amendments to IAS 16 - Income Earned Before Start-Up
1-jan-2022
Clarifies the accounting treatment given to the consideration obtained with the sale of products that result from the production in test phase of tangible fixed assets, prohibiting their
deduction from the acquisition cost of the assets. The entity recognizes the income obtained from the sale of such products and the costs of their production in results.
Amendments to IAS 37 - Onerous Contracts - costs of
fulfilling a contract
1-jan-2022
Amendments to IFRS 1 - Subsidiary as a first-time
adopter of IFRS (included in the annual improvements
for the 2018-2020 cycle)
1-jan-2022
Amendments to IFRS 9 - Derecognition of financial
liabilities - Fees to be included in the ‘10 per cent’
change test (included in the annual improvements for
the 2018 2020 cycle)
1-jan-2022
This amendment specifies that in assessing whether or not a contract is onerous, only expenses directly related to the performance of the contract can be considered, such as incremental
costs related to direct labor and materials and the allocation of other directly related expenses such as the allocation of depreciation expenses for tangible assets used to perform the
contract.
General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly charged to the counterparty in accordance with the contract.
This amendment should be applied to contracts that, at the beginning of the first annual reporting period to which the amendment is applied, still include unfulfilled contractual obligations,
without restating the comparative.
This improvement clarifies which fees an entity should include when assessing whether the terms of a financial liability are substantially different from the terms of the original financial
liability. This improvement clarifies that, when performing derecognition tests on renegotiated liabilities, only fees paid or received between the debtor and the creditor should be included,
including fees paid or received by the debtor or the creditor on behalf of the other.
This improvement eliminates the requirement to exclude tax cash flows in the fair value measurement of biological assets, ensuring consistency with the principles of IFRS 13 - Fair Value.
This improvement clarifies which fees an entity should include when assessing whether the terms of a financial liability are substantially different from the terms of the original financial
liability. This improvement clarifies that, when performing derecognition tests on renegotiated liabilities, only fees paid or received between the debtor and the creditor should be included,
including fees paid or received by the debtor or the creditor on behalf of the other.
Amendments to IAS 41 - Taxation and fair value
measurement (included in the annual improvements for
the 2018-2020 cycle)
1-jan-2022
This improvement eliminates the requirement to exclude tax cash flows in the fair value measurement of biological assets, ensuring consistency with the principles of IFRS 13 - Fair Value.
IFRS 17 - Insurance Contracts
1-jan-2023
IFRS 17 applies to all insurance contracts (i.e. life, non-life, direct insurance and reinsurance), regardless of the type of entity that issues them, as well as some guarantees and some financial
instruments with discretionary participation features. In general terms, IFRS 17 provides an accounting model for insurance contracts that is more useful and more consistent for issuers. In
contrast to the requirements of IFRS 4, which are based on previously adopted local accounting policies, IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant
accounting aspects.
191
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes These standards have not yet been endorsed by the European Union and, as such, have not been
applied by the Bank for the year ended December 31, 2021. No significant impacts on the financial
statements are expected as a result of their adoption.
Standards, interpretations, amendments and revisions not yet adopted by the European
Union
Norm / Interpretation
Description
Amendments to IAS 1 – Presentation of financial
statements - Classification of current and non-current
liabilities
This amendment aims to clarify the classification of liabilities as current or non-current balances depending on the rights that an entity has to defer its payment, at the end of each reporting period.
The classification of liabilities is not affected by the entity’s expectations (the assessment should determine whether a right exists, but should not consider whether the entity will or will not exercise that right), or by events
occurring after the reporting date, such as the breach of a “covenant”.
However, if the right to defer settlement for at least twelve months is subject to certain conditions being met after the reporting date, those criteria do not affect the right to defer settlement for the purpose of classifying a
liability as current or noncurrent.
This amendment also includes a new definition of “settlement” of a liability and is retrospective.
Amendments to IAS 8 – Definition of accounting
estimates
The amendment clarifies the distinction between change in accounting estimate, change in accounting policy and correction of errors. In addition, it clarifies how an entity uses measurement techniques and inputs to develop
accounting estimates.
Amendments to IAS 1 – Disclosure of accounting
policies
These amendments are intended to assist the entity in disclosing ‘material’ accounting policies, previously referred to as ‘significant’ policies. However, due to the absence of this concept in IFRS, it was decided to replace it by
the concept “materiality”, a concept already known to users of financial statements.
In assessing the materiality of accounting policies, the entity has to consider not only the size of the transactions but also other events or conditions and the nature of these.
Amendments to IAS 12 – Deferred tax related to assets
and liabilities arising from a single transaction
The amendments clarify that payments that settle a liability are tax deductible, however it is a matter of professional judgment whether such deductions are attributable to the liability that is recognized in the financial
statements or the related asset. This is important in determining whether there are temporary differences in the initial recognition of the asset or liability.
According to these amendments, the initial recognition exception is not applicable to transactions that have given rise to equal taxable and deductible temporary differences. It only applies if the recognition of a leasing asset
and a leasing liability gives rise to taxable and deductible temporary differences that are not equal.
Amendments to IFRS 17 – Insurance Contracts - Initial
application of IFRS 17 and IFRS 9 - Comparative
Information
This amendment to IFRS 17 relates to the presentation of comparative information for financial assets in the initial application of IFRS 17.
The amendment adds a transition option that allows an entity to apply an ‘overlay’ to the classification of a financial asset in the comparative period(s) presented in initially applying IFRS 17. The overlay allows all financial assets,
including those held in relation to non-contractual activities within the scope of IFRS 17 to be classified, instrument by instrument, in the comparative period(s) in a manner aligned with how the entity expects those assets to
be classified on initial application of IFRS 9.
NOTE 8 - MAIN ACCOUNTING ESTIMATES AND
JUDGEMENTS USED IN THE PREPARATION OF
THE FINANCIAL STATEMENTS
Considering that the current accounting framework requires applying judgements and calculating
estimates involving some degree of subjectivity, the use of different parameters or judgements based
on different evidence may result in different estimates. The main accounting estimates and judgments
used in applying the accounting principles by the Group are discussed in this Note in order to improve
the understanding of how their application affects the reported results of the Group and its disclosure.
The COVID-19 pandemic, despite the government and regulatory response measures adopted, resulted
in an additional high level of uncertainty about the Portuguese and European economy and in particular
banking activity, with an impact on the judgments and estimates used in the financial statements.
However, the internal control policies and standards adopted by the Group allow us to consider that
these judgments and estimates were made independently and appropriately as of 31 December 2021.
The relevant judgments made by management in the application of the Group’s accounting policies
and the main sources of uncertainty in the estimates were the same as those described in the last
reporting of the Financial Statements.
8.1 Impairment of financial assets at amortised cost and at fair
value through other comprehensive income
The critical judgements with greater impact on the recognized impairment values for the financial
assets at amortised cost and at fair value through other comprehensive income are the following:
• Assessment of the business model: the measurement and classification of financial assets depends
on the results of SPPI test and on the business model setting. The Group determines its business
model based on how it manages the financial assets and its business objectives. The Group
monitors if the business model classification is appropriate based on the analysis on the anticipated
derecognition of the assets at amortised cost or at fair value through other comprehensive income,
assessing if it is necessary to prospectively apply any changes;
• Significant increase on the credit risk: as mentioned on the Note 7.16 – Other financial assets
investments in credit institutions, customer loans and securities, the determination of the transfer of
an asset from stage 1 to stage 2 with the purpose of determining the respective impairment is made
based on the judgement that, in accordance to the Group management, constitutes a significant
increase on credit risk;
• Classification of default: Grupo novobanco’s internal definition of exposure in default is broadly in
line with the regulatory definition in Article 178 of CRR/CRD IV. This regulation defines qualitative
criteria for assessing the default classification – unlikely to pay -, which are replicated in the internal
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes definition implemented by Grupo novobanco and which result in performing judgements when
assessing the high probability that the borrower does not fulfil its obligations within the conditions
agreed with Grupo novobanco. This concept is covered in more detail below;
• Definition of groups of financial assets with similar credit risk characteristics: when the expected
credit losses are measured through collective model, the financial instruments are aggregated based
on the same risk characteristics. The Group monitors the credit risk characteristics in order to assure
the correct reclassification of the assets, in cases of changes on the credit risk characteristics;
• Models and assumptions: The Group uses several models and assumptions on the measurement of
the expected credit losses. The judgement is applied on the identification of the more appropriate
model for each type of asset as well as in the determination of the assumptions used in these models,
including the assumptions related with the main credit risk drivers. In addition, in compliance with
the IFRS9 regulation that clarifies the need for the impairment result to consider multiple scenarios,
a methodology for incorporating different scenarios into the risk parameters was implemented.
Thus, the calculation of collective impairment considers several scenarios with a specific weighting,
based on the internal methodology defined about scenarios - definition of multiple perspectives of
macroeconomic evolution, with probability of relevant occurrence.
8.2. Fair value of derivative financial instruments and other financial
assets and financial liabilities at fair value
Fair value is based on listed market prices when available; otherwise, fair value is determined based
on similar recent arm’s length transaction prices or using valuation methodologies, based on the net
present value of estimated future cash flows taking into consideration market conditions, the time
value, the yield curve and volatility factors, in accordance with IFRS 13 - Fair Value Measurement. The
Group uses several models and assumption in measuring the fair value of financial assets. Judgement
is applied on the identification of the more appropriate model for each type of asset as well as in the
determination of the assumptions used in these models, including the assumptions related with the
main credit risk drivers.
Consequently, the use of a different methodology or different assumptions or judgements in applying
a particular model could have produced different financial results, summarised in Note 42.
8.3. Corporate income taxes
The Group is subject to corporate income tax in numerous jurisdictions. Certain interpretations and
estimates are required in determining the overall corporate income tax amount. Different interpretations
and estimates could result in a different level of income tax, current and deferred, being recognized in
the period and evidenced in Note 30.
This aspect assumes additional relevance for effects of the analysis of the recoverability of deferred
taxes, while the Bank considers forecasts of futures taxable profits based on a group of assumptions,
including the estimate of income before taxes, adjustments to the taxable income and its interpretation
of fiscal legislation. This way, the recoverability of deferred taxes depends on the concretization of the
strategy of the Executive Board of Directors, namely in the capacity to generate the estimated taxable
results and its interpretation of fiscal legislation.
The Tax Authorities are charged with reviewing the calculation of the tax base made by the Bank during
a period of four or twelve years, in the event of reportable tax losses. Thus, it is possible that there are
corrections to the tax base, resulting mainly from differences in the interpretation of tax legislation.
However, the Bank’s Executive Board of Directors believes that there will be no significant corrections
to taxes on profits recorded in the financial statements.
8.4. Pensions and other employee benefits
The determination of the retirement pension liabilities presented in Note 16 requires the use of
assumptions and estimates, including the use of actuarial tables, assumptions regarding the growth
of pensions, salaries and discounts rates (which are determined based on the market rates associated
with high quality corporate bond, denominated in the same currency in which the benefits will be paid
and with a maturity similar to the expiry date of the plan’s obligations). These assumptions are based
on the expectations of the novobanco Group for the period during which the liabilities will be settled as
well as other factors that may impact the costs and liabilities of the pension plan.
Changes in these assumptions could materially affect the amounts determined.
8.5. Provisions and Contingent liabilities
The recognition of provisions involves a significant degree of complex judgment, namely identifying
whether there is a present obligation and estimating the probability and timing, as well as quantifying
the outflows that may arise from past events. When events are at an early stage, judgments and
estimates can be difficult to quantify due to the high degree of uncertainty involved. The Executive
Board of Directors monitors these matters as they develop to regularly reassess whether the provisions
should be recognized. However, it is often not feasible to make estimates, even when events are already
at a more advanced stage, due to existing uncertainties.
The complexity of such issues often requires expert professional advice in determining estimates,
particularly in terms of legal and regulatory issues. The amount of recognized provisions may also
be sensitive to the assumptions used, which may result in a variety of potential results that require
judgment in order to determine a level of provision that is considered appropriate in view of the event
in question.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes 8.6. Investment properties, Foreclosed assets and Non-current
assets held for sale
NOTE 9 – SEGMENT REPORTING
Investment properties are initially recognized at cost, including directly related transaction costs and
subsequently at fair value. Foreclosed assets and Non-current assets held for sale are measured at the
lower of the net book value and the fair value less costs to sell.
novobanco Group activities are centered on the financial sector targeting corporate, institutional and
private individual customers. Its decision center is in Portugal, making the domestic territory its main
market.
The fair value of these assets is determined based on valuations conducted by independent entities
specialized in this type of service, using the market, income or cost methods, as defined in Notes 7.18
and 7.19. The valuation reports are analysed internally, namely comparing the sales values with the
revalued values of the properties, to keep the valuation parameters and processes updated to the
market evolution.
The products and services rendered include deposit taking, granting of loans to corporate and private
customers, investment fund management, broker and custodian services and the commercialization
of life and non-life insurance products. Additionally, the Group makes short-, medium- and long-term
investments in the financial and currency exchange markets with the objective of taking advantage of
price changes or to get returns on its available financial resources.
The use of alternative methodologies and different assumptions may result in a different level of fair
value with respective impact on the recognized balance sheet value.
8.7. Entities included in the consolidation perimeter
For the determination of the entities to be included in the consolidation perimeter, the Group evaluates
the extent to which (i) it is exposed, or has rights, to the variability of the return from its involvement
with this entity, and (ii) it can seize that return through of its power. In this analysis, the Group also
considers shareholder agreements that may exist and that result in the power to take decisions that
impact the management of the entity’s activity. The decision that an entity should be consolidated
by the Group requires the use of judgments to determine to what extent the Group is exposed to the
variability of an entity’s return and has the power to seize that return. In using this judgment, the Group
analyses assumptions and estimates. Thus, other assumptions and estimates could lead to a different
consolidation perimeter, with a direct impact on the balance sheet.
For this purpose, as at 31 December 2021, the Group has novobanco as its main operating unit - with
291 branches in Portugal (31 December 2020: 339 branches) and branches in Luxembourg and Spain
and 4 representation offices – with novobanco Açores (13 branches), Banco BEST (6 branches), GNB
GA, amongst other companies.
When evaluating performance by business area, the Group considers the following Operating Segments:
(1) Domestic Commercial Banking, including Retail, Corporate and Private Banking; (2) International
Commercial Banking; (3) Asset Management; (4) Markets; and (5) Corporate Centre. Each segment
integrates the novobanco structures that directly relate to it, as well as the units of the Group whose
businesses are mainly related to the segments. The individual and independent monitoring of each
operating unit of the Group is complemented, at the Executive Board of Directors of novobanco level,
by the definition of specific strategies and commercial programs for each unit.
During 2020, novobanco started the sale process of the Spanish Branch, which was reclassified to
a discontinued operation. With the completion of the Branch’s asset and liability sale transaction
in November 2021, the remaining assets and liabilities of the Branch are no longer integrated as a
discontinued operation.
8.8 Significant judgment in determining contract lease term
The Group has applied judgment to determine the lease term of certain agreements, in which it acts
as lessee, and which include renewal and termination options. The Group determines the lease term as
the non-cancellable lease term, together with any periods covered by an option to extend the lease if
it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if
reasonably certain not to be exercised. This assessment will have an impact on the lease term, which
will significantly affect the amount of the lease liabilities and recognized right-of-use assets.
The Group has the option, namely in real estate lease agreements, to lease assets for additional periods
from 1 month to 20 years. The Group applies judgment in assessing whether it is reasonably right
to exercise the renewal option. That is, it considers all the relevant factors that create an economic
incentive for renewal.
9.1. Description of the operating segments
Each of the operating segments includes the following activities, products, customers and Group
structures, aggregated by criteria of risk, market / geography and nature of the products and services:
Domestic Commercial Banking
This Operating Segment includes all the banking activity developed on national territory involving
corporate and private customers and using the branch network, corporate centres and other channels,
and includes the following sub segments:
a. Retail: corresponds to all the activity developed in Portugal with private customers and small
businesses. The financial information of the segment relates, amongst other products and services,
194
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes to mortgage loans, consumer credit, small business financing, deposits, retirement plans and other
insurance products sold to private customers, account management and electronic payments and
placement of investment funds, brokerage and custodian services;
9.2. Criteria for the allocation of activities and results to the
operating segments
b. Corporate and Institutional: includes the activities developed in Portugal with medium- and large-
sized companies, developed through a commercial structure dedicated to this segment, which
includes 20 Corporate Centres. This segment also includes activities with institutional and municipal
customers. The Group maintains an important presence in this segment, the result of the support it
has lent to the development of the national business community, focused on companies with good
risk, an innovative nature and an exporter activity;
c. Private Banking: In accordance with the commitments made to the Directorate General for
Competition of the European Commission, the Bank discontinued the provision of private banking
services and therefore this segment is no longer reported.
International Commercial Banking
This Operating Segment integrates the units located abroad, which banking activities focus both on
corporate and private customers, excluding the asset management business, which is integrated in the
corresponding segment.
Amongst the units comprising this segment are novobanco’s branches in Luxembourg and Spain. The
aggregation of this units in the same segment is related with the geographic criteria and with the
nature of the clients, the products and the services provided.
Asset Management
This segment, which depends on the specific nature of the products and services provided, includes the
asset management activities developed both in Portugal and abroad through specialised companies
incorporated for the purpose. The product range includes all types of funds - investment funds, real
estate funds and pension funds - as well as discretionary management and portfolio management.
Markets
This segment includes the overall financial management of the Group, including the taking and ceding of
funds on the financial markets, as well as the investment and risk management of credit, interest rate,
currency and securities instruments, whether of a strategic nature or related to the current activity of
the Markets’ area. It also covers the activity involving non-resident institutional investments and the
effects of strategic decisions with a transversal impact on the Group.
Corporate Centre
This area does not correspond to an operational segment in the true sense of the concept, it is an
aggregation of transversal corporate structures that ensure the basic functions of the Group’s global
management, such as those linked to the Administration and Supervision, Compliance, Planning,
Accounting, Risk Management and Control, Institutional Communication, Internal Audit, Organization
and Quality, among others. Since the Bank is in a tax loss situation in the first six months of 2021 and
2020, the deferred taxes recognized were fully allocated to this segment.
The financial information presented for each segment was prepared in accordance with the criteria
followed in the preparation of the internal information that is analysed by the Executive Board of
Directors of the Group, as required by IFRS.
The accounting policies applied in the preparation of the financial information related to the operating
segments are consistent with those used in the preparation of these consolidated financial statements,
which are described in Note 7, with the adoption of the following additional principles:
Measurement of the profit or loss of the segments
The Group uses net income / (loss) before taxes as the measure of the profit or loss for purposes of
evaluating the performance of each operating segment.
Autonomous operating units
As mentioned above, each autonomous operating unit (foreign branches, subsidiaries and associated
companies) is evaluated separately, as each of these units is considered an investment centre.
Additionally, based on the characteristics of the primary business developed by these units, they are
fully integrated into one of the Operating Segments, i.e. their assets, liabilities, income and expenses.
novobanco’s structures dedicated to the Segment
novobanco’s activity, given its characteristics, can be allocated to most of its operating segments and
is, therefore, accordingly disaggregated.
For purposes of allocating the financial information, the following principles are used: (i) the origin
of the operation, i.e. the operation is allocated to the same segment that the commercial structure
that originated it integrates, even if, in a subsequent phase, the Group, strategically, decides to
securitize some of the assets; (ii) the allocation of a commercial margin to mass-products, defined at
top management level when the products are launched; (iii) for non-mass products, the allocation of
a margin directly negotiated by the commercial structures with customers; (iv) the allocation of the
direct costs of commercial and central structures dedicated to the segment; (v) the allocation of indirect
costs (central support and IT services) determined based on specific drivers; (vi) the allocation of credit
risk determined in accordance with the impairment model; and (vii) the allocation of novobanco ‘s total
equity to the Markets segment.
The transactions between the legally autonomous units of the Group are made at market prices;
the price for services rendered between the structures of each unit, namely the price established for
internal funding between units, is determined using the margins process referred to above (which varies
in accordance with the strategic relevance of the product and the equilibrium of the structures’ funding
and lending functions); the remaining internal transactions are allocated to the segments, without any
margin for the supplier; the strategic decisions and/or of an exceptional nature are analysed on a case-
by-case basis, with the income and/or costs being generally allocated to the Markets segment.
195
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes The interest rate risk, currency risk, liquidity risk and others, excluding credit risk, are included in the
Financial Department, which mission it is to undertake the Group’s financial management, and which
activity and results are included in the Markets segment.
non-current assets held by the remaining subsidiaries being allocated to the segment in which these
subsidiaries primarily develop their business.
Corporate income tax
Corporate income tax is part of the Group’s net income that, for purposes of monitoring the performance
of the Operating Segments, by the Executive Board of Directors, does not affect the evaluation of
most of the Operating Segments. In the tables presented below the deferred tax recognized in net
income for the year are included in the Corporate Centre. Deferred tax assets and liabilities are included
in the Markets segment.
Interest and similar income / expense
Since the Group’s activities are exclusively carried out in the financial sector, the income reflects,
fundamentally, the difference between interest received on assets and interest paid on liabilities.
This situation and the fact that the segment evaluation is based on margins previously negotiated or
determined for each product, leads to the presentation of the results from the intermediation activity,
as permitted by IFRS 8, paragraph 23, at the net value of interest, under the designation “Net interest
income / expense”.
Corporate income tax
Corporate income tax is part of the Group’s net income that, for purposes of monitoring the performance of the Operating Segm ents,
by the Executive Board of Directors, does not affect the evaluation of most of the Operating Segments. In the tables presente d below
the deferred tax recognized in net income for the year are included in the Corporate Centre. Deferred tax assets and liabilities are
included in the Markets segment.
Investments presented using the equity method
Investments in associated companies presented under the equity method are included in the Markets
segment, in the case of novobanco’s associated companies. For other associated companies of the
Group, these entities are included in the segment to which they relate.
Domestic and International Areas
In presenting the financial information by geographical areas, the operating units that make up the International Area are th e branches
of novobanco in Spain and Luxembourg, the subsidiaries NB Servicios and Novo Vanguarda (both settled during 2021), the u nits
located outside GNB GA, and also Banco Delle Tre Venezie (no longer part of the Group's perimeter during 2021) and Ijar Leasi ng
Algérie as discontinued operations.
Non-current assets
The financial and economic elements related to the international area are those consistent with the financial statements of s uch units,
Non-current assets, according to IFRS 8, include Tangible fixed assets, Intangible assets and Non-
with the respective consolidation adjustments and eliminations.
current assets held for sale. novobanco includes these assets in the Markets segment, with the
The segment reporting is presented as follows:
Domestic and International Areas
In presenting the financial information by geographical areas, the operating units that make up the
International Area are the branches of novobanco in Spain and Luxembourg, the subsidiaries NB
Servicios and Novo Vanguarda (both settled during 2021), the units located outside GNB GA, and also
Banco Delle Tre Venezie (no longer part of the Group’s perimeter during 2021) and Ijar Leasing Algérie
as discontinued operations.
The financial and economic elements related to the international area are those consistent with the
financial statements of such units, with the respective consolidation adjustments and eliminations.
The segment reporting is presented as follows:
Net interest income
Net fees and comissions
Other operating income
Total operating income
Operating expenses
Of which:
Provisions / Impairment losses
Depreciation and amortization
Net gains / (losses) from investments in subsidiaries, joint ventures and associated companies
registered by the equity method
Profit / (loss) from continued operations before taxes and non-controlling interests
Taxes
Profit / (loss) of discontinued operations
Net Profit / (loss) for the year attributable to non-controlling interests
Net Profit / (loss) for the year attributable to Shareholders of the parent
Intersegment operating income (1)
Total Net Assets
Total Liabilities
Investments in associated companies
Investments in tangible fixed assets
Investments in intangible assets
Investments in investment properties
Investments in other assets - real estate properties
(1) Intersegment operating income refers essentially to interest (net interest income)
Net interest income
Net fees and comissions
Other operating income
Total operating income
Operating Costs
Of which:
Provisions / Impairment losses
Depreciation and amortization
registered by the equity method
Taxes
Profit / (loss) of discontinued operations
Net Profit / (loss) for the year attributable to non-controlling interests
Net Profit / (loss) for the year attributable to Shareholders of the parent
Intersegment operating income (1)
Total Net Assets
Total Liabilities
Investments in associated companies
Investments in tangible fixed assets
Investments in intangible assets
Investments in other assets - real estate properties
(1) Intersegment operating income refers essentially to interest (net interest income)
31.12.2021
(in thousands of Euros)
Asset
Management
Life
Insurance
Markets
Corporate
centre
Total
Retail
Corporate and
Institutional
184 453
177 343
( 9 690)
196 875
85 548
15 640
352 106
298 063
International
Commercial
Banking
30 391
10 053
22 162
62 606
( 4)
27 303
( 643)
26 656
257 673
208 273
21 064
12 620
16 167
14 979
178 816
13 418
915
576
-
-
-
94 433
-
-
2 053
92 380
2 018
89 790
-
-
-
41 542
1 734
8 796
-
89 790
48 604
6 486
122 553
20 912 255
10 131 250
2 347 139
20 605 900
9 983 157
2 262 731
-
859
288
-
449
-
-
-
-
-
-
-
-
-
2 511
330
715
-
14 036
4 102
-
-
9 934
9
97 837
11 127
-
78
27
-
-
Retail
Corporate and
Institutional
International
Commercial
Banking
Asset
Management
Life
Insurance
31.12.2020
200 736
165 851
19 288
385 875
221 839
98 403
24 873
19 687
10 022
( 28 727)
( 11)
26 023
170
345 115
982
26 182
354 653
515 379
29 252
14 755
100 195
12 355
477 820
20 996
920
668
1 624
640
( 170 264)
( 69 155)
5 977
78 170
20 626 864
10 704 403
4 474 776
20 372 193
10 862 412
4 470 127
-
-
-
-
-
-
-
-
-
-
305
-
-
1 941
-
-
9 821
189
88 507
11 554
825
18
-
-
-
-
-
1 134
30 088
4 164
-
3 718
340
624
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
161 679
( 22 093)
90 940
230 526
-
-
-
-
196 775
105 230
144 006
-
1 097
15 722
3 794
37 545
-
( 3 909)
5 632
-
( 105 230)
( 21 022)
-
-
28 004
( 84 208)
( 126 289)
11 130 034
8 606 129
94 590
81 030
25 381
4 973
41 702
-
-
-
-
6
-
-
-
573 394
278 154
118 409
969 957
801 635
352 737
34 004
3 794
172 116
( 15 186)
4 887
7 685
184 504
4 777
44 618 515
41 469 044
94 590
81 973
25 696
4 973
44 662
(in thousands of Euros)
Markets
Corporate
centre
Total
112 883
( 33 781)
( 493 298)
( 414 196)
-
-
-
-
639 600
104 713
590 828
-
1 215
17 274
9 430
11 617
( 2 070)
( 11 208)
( 80 342)
8 501 036
5 532 665
93 630
43 093
26 508
28 126
-
-
-
-
-
-
-
-
-
344
555 134
266 518
( 477 694)
343 958
1 658 352
1 191 463
33 072
9 430
(1 304 964)
1 082
( 33 345)
( 10 074)
(1 329 317)
8 158
44 395 586
41 248 951
93 630
48 285
26 866
30 691
196
Net gains / (losses) from investments in subsidiaries, joint ventures and associated companies
Profit / (loss) from continued operations before taxes and non-controlling interests
31 222
( 170 264)
( 28 270)
11 427
(1 044 366)
( 104 713)
55
( 40 830)
3 104
1 498
8 057
( 13 694)
8 057
(1 046 845)
( 91 019)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 41 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Corporate income tax
Corporate income tax is part of the Group’s net income that, for purposes of monitoring the performance of the Operating Segm ents,
by the Executive Board of Directors, does not affect the evaluation of most of the Operating Segments. In the tables presente d below
the deferred tax recognized in net income for the year are included in the Corporate Centre. Deferred tax assets and liabilities are
included in the Markets segment.
Domestic and International Areas
In presenting the financial information by geographical areas, the operating units that make up the International Area are th e branches
of novobanco in Spain and Luxembourg, the subsidiaries NB Servicios and Novo Vanguarda (both settled during 2021), the u nits
located outside GNB GA, and also Banco Delle Tre Venezie (no longer part of the Group's perimeter during 2021) and Ijar Leasi ng
Algérie as discontinued operations.
The financial and economic elements related to the international area are those consistent with the financial statements of s uch units,
with the respective consolidation adjustments and eliminations.
The segment reporting is presented as follows:
Retail
Corporate and
Institutional
Asset
Life
Management
Insurance
Markets
Corporate
centre
Total
31.12.2021
(in thousands of Euros)
Net gains / (losses) from investments in subsidiaries, joint ventures and associated companies
Profit / (loss) from continued operations before taxes and non-controlling interests
94 433
89 790
41 542
257 673
208 273
21 064
12 620
196 775
105 230
16 167
14 979
178 816
13 418
915
576
330
715
Net interest income
Net fees and comissions
Other operating income
Total operating income
Operating expenses
Of which:
Provisions / Impairment losses
Depreciation and amortization
registered by the equity method
Taxes
Profit / (loss) of discontinued operations
Total Net Assets
Total Liabilities
Investments in associated companies
Investments in tangible fixed assets
Investments in intangible assets
Investments in investment properties
Net Profit / (loss) for the year attributable to non-controlling interests
Net Profit / (loss) for the year attributable to Shareholders of the parent
Intersegment operating income (1)
Investments in other assets - real estate properties
(1) Intersegment operating income refers essentially to interest (net interest income)
Net interest income
Net fees and comissions
Other operating income
Total operating income
Operating Costs
Of which:
Provisions / Impairment losses
Depreciation and amortization
Net gains / (losses) from investments in subsidiaries, joint ventures and associated companies
registered by the equity method
Profit / (loss) from continued operations before taxes and non-controlling interests
Taxes
Profit / (loss) of discontinued operations
Net Profit / (loss) for the year attributable to non-controlling interests
Net Profit / (loss) for the year attributable to Shareholders of the parent
Intersegment operating income (1)
Total Net Assets
Total Liabilities
Investments in associated companies
Investments in tangible fixed assets
Investments in intangible assets
Investments in other assets - real estate properties
(1) Intersegment operating income refers essentially to interest (net interest income)
International
Commercial
Banking
30 391
10 053
22 162
62 606
184 453
177 343
( 9 690)
196 875
85 548
15 640
352 106
298 063
-
-
-
2 053
92 380
2 018
-
-
-
-
-
-
1 734
8 796
89 790
48 604
6 486
122 553
20 912 255
10 131 250
2 347 139
20 605 900
9 983 157
2 262 731
-
859
288
-
449
-
-
-
-
-
-
-
-
-
2 511
( 4)
27 303
( 643)
26 656
14 036
4 102
-
-
-
9 934
9
97 837
11 127
-
78
27
-
-
Retail
Corporate and
Institutional
International
Commercial
Banking
Asset
Management
Life
Insurance
31.12.2020
200 736
165 851
19 288
385 875
221 839
98 403
24 873
19 687
10 022
( 28 727)
( 11)
26 023
170
345 115
982
26 182
354 653
515 379
29 252
14 755
100 195
12 355
477 820
20 996
920
668
1 624
640
-
-
-
-
31 222
( 170 264)
( 28 270)
11 427
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 097
15 722
37 545
( 105 230)
-
( 21 022)
28 004
( 84 208)
161 679
( 22 093)
90 940
230 526
144 006
3 794
( 3 909)
5 632
( 126 289)
11 130 034
8 606 129
94 590
81 030
25 381
4 973
41 702
-
-
-
-
-
-
-
-
-
-
-
-
6
-
-
-
573 394
278 154
118 409
969 957
801 635
352 737
34 004
3 794
172 116
( 15 186)
4 887
7 685
184 504
4 777
44 618 515
41 469 044
94 590
81 973
25 696
4 973
44 662
(in thousands of Euros)
Markets
Corporate
centre
Total
112 883
( 33 781)
( 493 298)
( 414 196)
-
-
-
-
639 600
104 713
590 828
-
1 215
17 274
9 430
-
(1 044 366)
( 104 713)
-
-
1 134
30 088
4 164
-
-
-
55
( 40 830)
3 104
1 498
8 057
11 617
( 2 070)
-
-
-
( 11 208)
( 13 694)
-
-
( 170 264)
( 69 155)
5 977
78 170
20 626 864
10 704 403
4 474 776
20 372 193
10 862 412
4 470 127
-
3 718
340
624
-
-
-
-
-
305
-
1 941
9 821
189
88 507
11 554
-
825
18
-
8 057
(1 046 845)
( 91 019)
-
-
-
-
-
-
-
( 80 342)
8 501 036
5 532 665
93 630
43 093
26 508
28 126
-
-
-
-
344
-
-
555 134
266 518
( 477 694)
343 958
1 658 352
1 191 463
33 072
9 430
(1 304 964)
1 082
( 33 345)
( 10 074)
(1 329 317)
8 158
44 395 586
41 248 951
93 630
48 285
26 866
30 691
The geographical information of the different business units of the Group is as follows:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The geographical information of the different business units of the Group is as follows:
- 41 -
31.12.2021
(in thousands of Euros)
Portugal
Spain
Luxembourg
Brazil
Angola
Other
Total
151 404
2 436
31 016
( 352)
-
-
184 504
Net profit / (loss) for the period attributable to Shareholders of
the parent
(of which: rel. to discontinued units)
Total income
Intersegment operating income
Net assets
(of which: rel. to discontinued units)
Investments in associated companies
Investments in tangible fixed assets
Investments in intangible assets
Investments in investment properties
Investments in other assets - real estate properties
87
4 609 947
( 110 374)
42 650 983
3 339
94 590
81 973
25 696
4 973
42 151
5 171
8 890
-
56 346
-
-
-
-
-
2 511
-
243 098
115 151
1 902 794
-
-
-
-
-
-
( 371)
-
-
1 006
1 006
-
-
-
-
-
Profits / (losses) of continuing operating units before taxes
and non-controlling interests
Turnover (a) (b)
Number of employees (a)
126 120
4 898
41 450
( 352)
1 196 888
4 165
94
10
172 529
11
-
-
-
-
-
3 060
702
-
-
-
-
-
-
-
-
-
-
-
4 887
4 861 935
4 777
4 326 44 618 515
4 326
9 373
94 590
-
81 973
-
25 696
-
-
4 973
44 662
-
-
172 116
-
7
1 369 511
4 193
(a) Financial information presented according to art. 2 of DL no. 157/2014
(b) Turnover corresponds to the sum of the following items in the consolidated operating account: interest income, dividend income, fee and commission income, gains or losses on derecognition of
financial assets and liabilities not measured at fair value through profit or loss on financial assets and liabilities held for trading, gains or losses on financial assets mandatorily at fair value through
profit or loss, gains or losses on financial assets and liabilities carried at fair value through profit or loss hedge accounting losses, exchange differences, gains or losses on derecognition of non-
financial assets, other operating operating income and proportion of profits or losses on investments in subsidiaries, joint ventures and associates accounted for under the equity method.
Portugal
Spain
Luxembourg
Brazil
Angola
Cape Verde Macao
Other
Total
31.12.2020
(in thousands of Euros)
197
Net profit / (loss) for the period attributable to Shareholders of
(1 300 233)
( 37 559)
8 322
153
(of which: rel. to discontinued units)
6 466
( 39 811)
the parent
Total income
Net assets **
Intersegment operating income
(of which: rel. to discontinued units) **
Investments in associated companies **
Investments in tangible fixed assets **
Investments in intangible assets **
Investments in investment properties **
7 861
1 545 138
1 299
1 883
2 300 1 559 518
4 693 042
( 41 855)
244 271
50 013
1 054
40 323 724
2 062 005 1 998 432
1 740
-
-
-
-
-
-
-
-
-
-
-
-
305
93 630
47 980
26 866
11 966
28 750
-
-
-
-
-
-
-
-
3 060
1 037
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1 329 317)
( 33 345)
- 4 938 367
8 158
6 625 44 395 586
93 630
48 285
26 866
11 966
30 691
-
(1 304 964)
-
7
803 893
4 582
Investments in other assets - real estate properties **
1 941
Profits / (losses) of continuing operating units before taxes
and non-controlling interests (a)
Turnover (a) (b)
Number of employees (a)
(1 315 492)
( 817)
11 187
695 966
4 560
-
-
107 489
10
158
438
5
(a) Financial information presented according to art. 2 of DL no. 157/2014
(b) Turnover corresponds to the sum of the following items in the consolidated operating account: interest income, dividend income, fee and commission income, gains or losses on derecognition of financial assets and liabilities not
measured at fair value through profit or loss on financial assets and liabilities held for trading, gains or losses on financial assets mandatorily at fair value through profit or loss, gains or losses on financial assets and liabilities carried at
fair value through profit or loss hedge accounting losses, exchange differences, gains or losses on derecognition of non-financial assets, other operating operating income and proportion of profits or losses on investments in
subsidiaries, joint ventures and associates accounted for under the equity method.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 41 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The geographical information of the different business units of the Group is as follows:
Net profit / (loss) for the period attributable to Shareholders of
151 404
2 436
31 016
( 352)
(of which: rel. to discontinued units)
87
5 171
-
( 371)
31.12.2021
(in thousands of Euros)
Portugal
Spain
Luxembourg
Brazil
Angola
Other
Total
1 006
1 006
3 060
702
4 326 44 618 515
4 326
4 609 947
( 110 374)
8 890
243 098
115 151
42 650 983
56 346
1 902 794
3 339
94 590
81 973
25 696
4 973
42 151
-
-
-
-
-
-
-
-
-
-
-
-
1 196 888
4 165
94
10
172 529
11
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
184 504
4 887
4 861 935
4 777
9 373
94 590
81 973
25 696
4 973
44 662
-
-
-
-
-
-
-
-
-
-
-
172 116
1 369 511
7
4 193
the parent
Total income
Net assets
Intersegment operating income
(of which: rel. to discontinued units)
Investments in associated companies
Investments in tangible fixed assets
Investments in intangible assets
Investments in investment properties
and non-controlling interests
Turnover (a) (b)
Number of employees (a)
Investments in other assets - real estate properties
2 511
Profits / (losses) of continuing operating units before taxes
126 120
4 898
41 450
( 352)
(a) Financial information presented according to art. 2 of DL no. 157/2014
(b) Turnover corresponds to the sum of the following items in the consolidated operating account: interest income, dividend income, fee and commission income, gains or losses on derecognition of
financial assets and liabilities not measured at fair value through profit or loss on financial assets and liabilities held for trading, gains or losses on financial assets mandatorily at fair value through
profit or loss, gains or losses on financial assets and liabilities carried at fair value through profit or loss hedge accounting losses, exchange differences, gains or losses on derecognition of non-
financial assets, other operating operating income and proportion of profits or losses on investments in subsidiaries, joint ventures and associates accounted for under the equity method.
Portugal
Spain
Luxembourg
Brazil
Angola
Cape Verde Macao
Other
Total
31.12.2020
(in thousands of Euros)
(1 300 233)
( 37 559)
8 322
153
-
-
-
-
(1 329 317)
Net profit / (loss) for the period attributable to Shareholders of
the parent
(of which: rel. to discontinued units)
Total income
Intersegment operating income
Net assets
(of which: rel. to discontinued units)
Investments in associated companies
Investments in tangible fixed assets
Investments in intangible assets
Investments in other assets - real estate properties
6 466
4 693 042
( 41 855)
40 323 724
7 861
93 630
47 980
26 866
28 750
( 39 811)
-
-
-
244 271
50 013
2 062 005 1 998 432
-
1 545 138
-
-
305
-
-
-
-
1 941
Profits / (losses) of continuing operating units before taxes
and non-controlling interests (a)
Turnover (a) (b)
Number of employees (a)
(1 315 492)
( 817)
11 187
695 966
4 560
-
-
107 489
10
-
1 054
-
1 740
-
-
-
-
-
158
438
5
-
-
-
3 060
1 037
-
-
-
-
-
-
-
-
-
-
-
1 299
-
-
-
-
-
-
-
-
-
-
-
1 883
-
-
-
-
-
-
-
( 33 345)
-
- 4 938 367
8 158
-
6 625 44 395 586
2 300 1 559 518
93 630
48 285
26 866
30 691
-
-
-
-
-
(1 304 964)
-
7
803 893
4 582
(a) Financial information presented according to art. 2 of DL no. 157/2014
(b) Turnover corresponds to the sum of the following items in the consolidated operating account: interest income, dividend income, fee and commission income, gains or losses on derecognition of financial assets and liabilities not
measured at fair value through profit or loss on financial assets and liabilities held for trading, gains or losses on financial assets mandatorily at fair value through profit or loss, gains or losses on financial assets and liabilities carried at
fair value through profit or loss hedge accounting losses, exchange differences, gains or losses on derecognition of non-financial assets, other operating operating income and proportion of profits or losses on investments in
subsidiaries, joint ventures and associates accounted for under the equity method.
NOTE 10 – NET INTEREST INCOME
NOTE 10 – NET INTEREST INCOME
The breakdown of this caption as at 31 December 2021 and 2020 is as follows:
The breakdown of this caption as at 31 December 2021 and 2020 is as follows:
Calculated by the effective interest method
Other
Calculated by the effective interest method
Other
31.12.2021
31.12.2020
(in thousands of Euros)
Assets /
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
liabilities at
amortized cost
Income/expens
es from
negative
interest rates
From assets /
liabilities at fair
value through
profit or loss
From assets /
liabilities at fair
value through other
comprehensive
income
Total
Assets /
liabilities at
amortized cost
From assets /
liabilities at fair
value through other
comprehensive
income
Income/expens
es from
negative
interest rates
From assets /
liabilities at fair
value through
profit or loss
- 42 -
Total
Interest Income
Interest from loans and advances
Interest from deposits with and loans and
advances to banks
Interest from securities
Interest from derivatives held for risk
management purposes
Other interest and similar income
Interest Expenses
Interest on debt securities issued
Interest on amounts due to customers
Interest on deposits from Central Banks and
other banks
Interest on subordinated liabilities
Interest on derivatives held for risk
management purposes
Other interest and similar expenses
13 528
51 973
-
1 048
565 516
36 732
51 328
7 026
34 168
-
7 024
136 278
429 238
498 967
12 965
-
-
75 062
-
-
511 932
524 695
13 388
-
88 590
19 111
-
39 401
-
-
538 083
58 512
71 585
-
9 211
132 769
43 713
82 093
-
10 793
136 599
-
-
1 544
4 576
-
-
6 120
1 048
-
530
-
-
1 630
8 353
-
-
9 983
530
84 550
76 606
13 787
740 459
588 049
95 481
41 031
19 146
743 707
-
-
-
-
-
-
-
84 550
-
-
11 380
-
6 991
1 105
19 476
57 130
-
-
-
-
36 732
51 328
39 487
71 688
18 406
15 991
34 168
34 165
11 311
18 302
-
-
8 129
11 311
167 065
2 476
573 394
7 549
168 880
419 169
-
-
-
-
-
-
-
-
-
2 750
-
5 771
356
8 877
-
-
-
-
39 487
71 688
18 741
34 165
10 816
16 587
-
7 905
10 816
188 573
95 481
32 154
8 330
555 134
On December 31, 2021, the item interest on loans and advances includes Euro 31,037 thousand related to finance lease operations
(December 31, 2020: Euro 35,385 thousand).
In relation to repurchase agreement operations, interest from deposits from Other banks includes, as of December 31, 2021, the
amount of Euro 2,301 thousand (December 31, 2020: Euro 16 thousand in customer deposits and Euro 822 thousand in interest from
deposits of other banks).
198
Interest income and expense items related to derivative interest include, according to the accounting policy described in Notes 7.10.6
and 7.2, interest from hedging derivatives and from derivatives used to manage the economic risk of certain financial assets and
liabilities designated at fair value through profit or loss, as per the accounting policies described in Notes 7.10.6 and 7.10.7.
NOTE 11 – DIVIDEND INCOME
The breakdown of this caption is as follows:
Financial assets mandatorily at fair value through profit or loss
Shares
Euronext NV
Visa Inc CL C
Others
Participation units
Explorer III B
Fundo Solução Arrendamento
Fundo Arrendamento Mais
Others
Shares
Financial assets measured at fair value through other comprehensive income
(in thousands of Euros)
31.12.2021
31.12.2020
2 162
1 801
226
135
7 604
7 604
-
-
-
1 781
1 391
261
129
6 407
634
3 141
1 593
1 039
1 330
11 096
8 290
16 478
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 42 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 10 – NET INTEREST INCOME
The breakdown of this caption as at 31 December 2021 and 2020 is as follows:
Calculated by the effective interest method
Other
Calculated by the effective interest method
Other
31.12.2021
31.12.2020
Assets /
From assets /
liabilities at fair
liabilities at
value through other
amortized cost
comprehensive
income
Income/expens
From assets /
es from
negative
liabilities at fair
value through
interest rates
profit or loss
Total
Assets /
From assets /
liabilities at fair
liabilities at
value through other
amortized cost
comprehensive
income
Income/expens
From assets /
es from
negative
liabilities at fair
value through
interest rates
profit or loss
Total
(in thousands of Euros)
498 967
12 965
-
511 932
524 695
13 388
-
Interest Income
Interest from loans and advances
Interest from deposits with and loans and
advances to banks
Interest from securities
Interest from derivatives held for risk
management purposes
Other interest and similar income
Interest Expenses
Interest on debt securities issued
Interest on amounts due to customers
13 528
51 973
-
1 048
565 516
36 732
51 328
-
75 062
-
-
88 590
19 111
-
39 401
-
-
538 083
58 512
71 585
-
9 211
132 769
43 713
82 093
-
10 793
136 599
-
-
1 544
4 576
-
-
6 120
1 048
-
530
-
-
1 630
8 353
-
-
9 983
530
84 550
76 606
13 787
740 459
588 049
95 481
41 031
19 146
743 707
-
-
-
-
-
-
-
-
36 732
51 328
39 487
71 688
18 406
15 991
34 168
34 165
11 311
18 302
-
-
8 129
11 311
167 065
2 476
573 394
7 549
168 880
419 169
-
-
-
-
-
-
-
-
-
2 750
-
5 771
356
8 877
-
-
-
-
39 487
71 688
18 741
34 165
10 816
16 587
-
7 905
10 816
188 573
95 481
32 154
8 330
555 134
Interest on deposits from Central Banks and
other banks
On December 31, 2021, the item interest on loans and advances includes Euro 31,037 thousand related
Interest on subordinated liabilities
to finance lease operations (December 31, 2020: Euro 35,385 thousand).
Interest on derivatives held for risk
management purposes
Other interest and similar expenses
In relation to repurchase agreement operations, interest from deposits from Other banks includes, as
of December 31, 2021, the amount of Euro 2,301 thousand (December 31, 2020: Euro 16 thousand in
customer deposits and Euro 822 thousand in interest from deposits of other banks).
136 278
429 238
34 168
19 476
84 550
57 130
7 024
6 991
1 105
-
-
-
-
-
-
7 026
-
11 380
Interest income and expense items related to derivative interest include, according to the accounting
policy described in Notes 7.10.6 and 7.2, interest from hedging derivatives and from derivatives used
to manage the economic risk of certain financial assets and liabilities designated at fair value through
profit or loss, as per the accounting policies described in Notes 7.10.6 and 7.10.7.
In relation to repurchase agreement operations, interest from deposits from Other banks includes, as of December 31, 2021, the
amount of Euro 2,301 thousand (December 31, 2020: Euro 16 thousand in customer deposits and Euro 822 thousand in interest from
deposits of other banks).
On December 31, 2021, the item interest on loans and advances includes Euro 31,037 thousand related to finance lease operations
(December 31, 2020: Euro 35,385 thousand).
NOTE 11 – DIVIDEND INCOME
The breakdown of this caption is as follows:
Interest income and expense items related to derivative interest include, according to the accounting policy described in Notes 7.10.6
and 7.2, interest from hedging derivatives and from derivatives used to manage the economic risk of certain financial assets and
liabilities designated at fair value through profit or loss, as per the accounting policies described in Notes 7.10.6 and 7.10.7.
NOTE 11 – DIVIDEND INCOME
The breakdown of this caption is as follows:
Financial assets mandatorily at fair value through profit or loss
Shares
Euronext NV
Visa Inc CL C
Others
Participation units
Explorer III B
Fundo Solução Arrendamento
Fundo Arrendamento Mais
Others
Financial assets measured at fair value through other comprehensive income
Shares
FLITPTREL X
SIBS SGPS
ESA Energia
Others
(in thousands of Euros)
31.12.2021
31.12.2020
2 162
1 801
226
135
7 604
7 604
-
-
-
1 330
-
785
275
270
1 781
1 391
261
129
6 407
634
3 141
1 593
1 039
8 290
6 000
978
1 106
206
11 096
16 478
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 43 -
199
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 12 – FEE AND COMMISSION INCOME AND FEE AND COMISSION EXPENSES
NOTE 12 – FEE AND COMMISSION INCOME AND FEE AND COMISSION EXPENSES
The breakdown of this caption is as follows:
The breakdown of this caption is as follows:
Fees and commissions income
From banking services
From guarantees provided
From transaction of securities
From commitments to third parties
From transactions carried out on behalf of third parties - cross-selling
Other fee and commission income
Fees and commissions expenses
With banking services rendered by third parties
With guarantees received
With transaction of securities
Other fee and commission income
(in thousands of Euros)
31.12.2021
31.12.2020
243 938
32 917
7 108
7 998
32 320
1 230
325 511
32 842
1 564
2 455
10 496
47 357
278 154
233 059
35 096
5 241
8 065
30 882
1 480
313 823
32 525
1 755
2 527
10 498
47 305
266 518
NOTE 13 – NET TRADING INCOME
The breakdown of this caption is as follows:
200
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 43 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 13 – NET TRADING INCOME
The breakdown of this caption is as follows:
Gains or losses on financial assets and liabilities not measured at fair value through
profit or loss
From financial assets at fair value through other comprehensive income
De ativos financeiros pelo justo valor através de outro rendimento integral
Títulos
Securities
Bonds and other fixed income securities
Bonds and other fixed income securities
De emissores públicos
Issued by government and public entities
Issued by other entities
De outros emissores
From financial assets and liabilities at amortised cost
De ativos e passivos financeiros pelo custo amortizado
Securities
Títulos
Bonds and other fixed income securities
Obrigações e outros títulos de rendimento fixo
Issued by other entities
De outros emissores
Loans
Crédito
Gains or losses on financial assets and liabilities held for trading
Securities
Títulos
Bonds and other fixed income securities
Issued by government and public entities
Issued by other entities
Financial Derivatives
Instrumentos financeiros derivados
Foreign exchange rate contracts
Interest rate contracts
Equity / Index contracts
Credit default contracts
Other
Gains or losses on financial assets mandatorily
measured at fair value through profit or loss
Securities
Bonds and other fixed income securities
Issued by other entities
31.12.2021
31.12.2020
Gains
Losses
Total
Gains
Losses
Total
(in thousands of Euros)
17 198
11 021
12 758
1 073
4 440
9 948
95 449
1 010
6 529
7 482
88 920
( 6 472)
28 219
13 831
14 388
96 459
14 011
82 448
-
142
( 142)
6 281
154
6 127
12 639
32 008
( 19 369)
8 336
8 439
( 103)
12 639
32 150
( 19 511)
14 617
8 593
6 024
40 858
45 981
( 5 213)
111 076
22 604
88 472
3 252
43
14 507
20
( 11 255)
23
13 710
5
13 121
-
589
5
59 421
424 716
31 491
16
4 179
62 678
360 721
30 678
18
3 600
( 3 257)
63 995
813
( 2)
579
68 313
604 219
82 587
42
488
52 606
713 130
81 270
71
777
15 707
( 108 911)
1 317
( 29)
( 289)
523 118
472 222
50 896
769 364
860 975
( 91 611)
15 796
5 497
10 299
12 877
36 600
( 23 723)
Shares
25 726
471
25 255
23 557
141 372
( 117 815)
Other variable income securities
24 956
13 813
11 143
746
223 208
( 222 462)
Gains or losses on financial assets and liabilities designated
at fair value through profit and loss
Securities
Other variable income securities
Gains or losses from hedge accounting
Fair value changes of hedging instruments
Fair value changes of hedging instruments
Foreign exchange rate contracts
66 478
19 781
46 697
37 180
401 180
( 364 000)
34
34
13
13
21
21
-
-
-
-
-
-
89 079
41 684
47 395
76 026
98 036
( 22 010)
Instrumentos financeiros derivados
Fair value changes of hedging item attributable to hedged risk
9 778
42 978
( 33 200)
50 369
40 000
10 369
Foreign exchange revaluation
98 857
84 662
14 195
126 395
138 036
( 11 641)
1 134 393 1 123 588
10 805
1 305 708 1 308 122
( 2 414)
1 863 738 1 746 247
117 491
2 349 723 2 730 917
( 381 194)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 45 -
201
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Gains or losses on financial assets and financial liabilities held for trading
Gains or losses on financial assets and financial liabilities held for trading
In accordance with the accounting policy described in Note 7.5, financial instruments are initially recorded at fair value. It is deemed
In accordance with the accounting policy described in Note 7.5, financial instruments are initially recorded at fair value. It is deemed
that the best evidence of the fair value of the instrument at inception is the transaction price. However, in certain circumstances, the
that the best evidence of the fair value of the instrument at inception is the transaction price. However, in certain circumstances, the
fair value of a financial instrument at inception, determined based on valuation techniques, may differ from the transaction price,
fair value of a financial instrument at inception, determined based on valuation techniques, may differ from the transaction price,
namely due to the existence of an intermediation fee, originating a day one profit.
namely due to the existence of an intermediation fee, originating a day one profit.
The Group recognizes in its income statement the gains arising from the intermediation fee (day one profit), which is generated,
The Group recognizes in its income statement the gains arising from the intermediation fee (day one profit), which is generated,
primarily, through currency and derivative financial product intermediation, given that the fair value of these instruments, both at
primarily, through currency and derivative financial product intermediation, given that the fair value of these instruments, both at
inception and subsequently, is determined based solely on observable market data and reflects the Group’s access to the (wholesale
inception and subsequently, is determined based solely on observable market data and reflects the Group’s access to the (wholesale
market).
market).
As at 31 December 2021, the gains recognized in the income statement arising from intermediation fees, which are essentially related
As at 31 December 2021, the gains recognized in the income statement arising from intermediation fees, which are essentially related
to foreign exchange transactions, amounted to approximately Euro 1,867 thousand (31 December 2020: Euro 5,100 thousand).
to foreign exchange transactions, amounted to approximately Euro 1,867 thousand (31 December 2020: Euro 5,100 thousand).
Gains or losses on financial assets mandatorily at fair value through profit or loss
Gains or losses on financial assets mandatorily at fair value through profit or loss
As at December 31, 2020, gains or losses on financial assets that are mandatorily accounted for at fair value through profit or loss -
As at December 31, 2020, gains or losses on financial assets that are mandatorily accounted for at fair value through profit or loss -
securities - shares and other variable income securities include a loss of Euro -300.2 million, resulting from the completion of an
securities - shares and other variable income securities include a loss of Euro -300.2 million, resulting from the completion of an
independent appraisal of the restructuring funds. These funds are “level 3” assets in accordance with the IFRS 13 fair value hierarchy
(quotations provided by third parties whose parameters used are not observable in the market), and novobanco requested an
independent evaluation from an international consulting company in articulation with real estate consultancy companies. This work
resulted in a market value of Euro 498.8 million for the total investment held in these assets (see Note 24), which led to the recording
of the said loss of Euro -300.2 million in 2020 (see Note 42).
independent appraisal of the restructuring funds. These funds are “level 3” assets in accordance with the IFRS 13 fair value hierarchy
(quotations provided by third parties whose parameters used are not observable in the market), and novobanco requested an
independent evaluation from an international consulting company in articulation with real estate consultancy companies. This work
resulted in a market value of Euro 498.8 million for the total investment held in these assets (see Note 24), which led to the recording
of the said loss of Euro -300.2 million in 2020 (see Note 42).
Gains or losses on financial assets and financial liabilities held for trading
In accordance with the accounting policy described in Note 7.5, financial instruments are initially
recorded at fair value. It is deemed that the best evidence of the fair value of the instrument at inception
is the transaction price. However, in certain circumstances, the fair value of a financial instrument at
inception, determined based on valuation techniques, may differ from the transaction price, namely
due to the existence of an intermediation fee, originating a day one profit.
The Group recognizes in its income statement the gains arising from the intermediation fee (day one
profit), which is generated, primarily, through currency and derivative financial product intermediation,
given that the fair value of these instruments, both at inception and subsequently, is determined based
solely on observable market data and reflects the Group’s access to the (wholesale market).
Gains or losses on hedge accounting
Gains or losses on hedge accounting include the fair value variations of the hedging instrument (derivative) and the fair value
variations of the hedged item attributable to the hedged risk. In the case where the hedge operations are interrupted early, there may
occur the payment/receipt of compensation, which is recorded in Other operating expenses/ Other operating income. As of December
31, 2021, the amount of compensation received amounted to Euro 1,726 thousand (December 31, 2020: Euro 10,181 thousand).
Gains or losses on hedge accounting
Gains or losses on hedge accounting include the fair value variations of the hedging instrument (derivative) and the fair value
variations of the hedged item attributable to the hedged risk. In the case where the hedge operations are interrupted early, there may
Foreign exchange differences
occur the payment/receipt of compensation, which is recorded in Other operating expenses/ Other operating income. As of December
31, 2021, the amount of compensation received amounted to Euro 1,726 thousand (December 31, 2020: Euro 10,181 thousand).
This caption includes the results arising from the foreign currency revaluation of monetary assets and
liabilities denominated in foreign currency in accordance with the accounting policy described in Note 7.1.
Foreign exchange differences
Foreign exchange differences
This caption includes the results arising from the foreign currency revaluation of monetary assets and liabilities denominated in foreign
This caption includes the results arising from the foreign currency revaluation of monetary assets and liabilities denominated in foreign
currency in accordance with the accounting policy described in Note 7.1.
currency in accordance with the accounting policy described in Note 7.1.
NOTE 14 – GAINS OR LOSSES ON DERECOGNITION OF NON-FINANCIAL ASSETS
NOTE 14 – GAINS OR LOSSES ON DERECOGNITION
OF NON-FINANCIAL ASSETS
NOTE 14 – GAINS OR LOSSES ON DERECOGNITION OF NON-FINANCIAL ASSETS
The breakdown of this caption is as follows:
The breakdown of this caption is as follows:
The breakdown of this caption is as follows:
31.12.2021
31.12.2020
31.12.2021
31.12.2020
(in thousands of Euros)
(in thousands of Euros)
6 761
294
495
7 551
( 3 069)
( 307)
( 40)
6 761
294
495
( 3 416)
7 551
( 3 069)
( 307)
( 40)
( 3 416)
As at 31 December 2021, the gains recognized in the income statement arising from intermediation
fees, which are essentially related to foreign exchange transactions, amounted to approximately Euro
1,867 thousand (31 December 2020: Euro 5,100 thousand).
Real Estate
Equipment
Other
Real Estate
Equipment
Other
Gains or losses on financial assets mandatorily at fair value through profit or
loss
As at December 31, 2020, gains or losses on financial assets that are mandatorily accounted for at
fair value through profit or loss - securities - shares and other variable income securities include a loss
of Euro -300.2 million, resulting from the completion of an independent appraisal of the restructuring
funds. These funds are “level 3” assets in accordance with the IFRS 13 fair value hierarchy (quotations
provided by third parties whose parameters used are not observable in the market), and novobanco
requested an independent evaluation from an international consulting company in articulation with
real estate consultancy companies. This work resulted in a market value of Euro 498.8 million for the
total investment held in these assets (see Note 24), which led to the recording of the said loss of Euro
-300.2 million in 2020 (see Note 42).
Gains or losses on hedge accounting
NOTE 15 – OTHER OPERATING INCOME AND
OTHER OPERATING EXPENSES
The breakdown of these captions is as follows:
Gains or losses on hedge accounting include the fair value variations of the hedging instrument
(derivative) and the fair value variations of the hedged item attributable to the hedged risk. In the
case where the hedge operations are interrupted early, there may occur the payment/receipt of
compensation, which is recorded in Other operating expenses/ Other operating income. As of December
31, 2021, the amount of compensation received amounted to Euro 1,726 thousand (December 31, 2020:
Euro 10,181 thousand).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 45 -
- 45 -
202
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 15 – OTHER OPERATING INCOME AND OTHER OPERATING EXPENSES
The breakdown of these captions is as follows:
Other operating income
IT Services
Gains / (losses) on recoveries of loans
Non-current advisory services
Income of Funds and real estate companies
Gains on the acquisition of debt issued by the Group (see Note 33)
Gains on investment properties revaluation (see Note 28)
Other income
Other operating expenses
Losses on repurchase of Group debt securities (see Note 33)
Direct and indirect taxes
Revaluation of liabilities
Contribution on the banking sector and solidarity additional
Membership fees and donations
Expenses of Funds and real estate companies
Charges with Supervisory entities
Contractual Indemnities (SPE)
Losses on investments properties revaluation (see Note 28)
Other expenses
Other operating income / (expenses)
(in thousands of Euros)
31.12.2021
31.12.2020
-
27 293
355
13 537
-
49 935
72 755
163 875
( 73 522)
( 6 588)
-
( 34 087)
( 2 430)
( 6 458)
( 1 849)
( 1 723)
( 18 753)
( 36 194)
( 181 604)
( 17 729)
-
30 181
264
29 955
-
3 590
56 742
120 732
( 26 998)
( 8 476)
-
( 32 752)
( 1 666)
( 11 647)
( 2 321)
( 86)
( 107 900)
( 38 448)
( 230 294)
( 109 562)
As at 31 December 2021, the amount received as compensation for discontinued hedging operations, included in other income,
amounts to Euro 1,726 thousand (31 December 2020: Euro 10,181 thousand) (see Note 13).
As at 31 December 2021, the amount received as compensation for discontinued hedging operations,
included in other income, amounts to Euro 1,726 thousand (31 December 2020: Euro 10,181 thousand)
(see Note 13).
Pursuant to Law No. 55-A/2010, of 31 December, a Bank Levy was established, which is levied on the average annual liabilities
recorded on the balance sheet net of own funds and of deposits covered by the guarantee of the Deposit Guarantee Fund and on
the national amount of derivative financial instruments, and whose regime has been extended.
As at 31 December 2021, novobanco Group recognized Banking Levy charges as a cost in the amount of Euro 28,893 thousand
Pursuant to Law No. 55-A/2010, of 31 December, a Bank Levy was established, which is levied on the
(31 December 2020: Euro 27,439 thousand). The cost recognized as at 31 December 2021 has been calculated and paid based on
the maximum rate of 0.110% levied on the average annual liabilities recorded on the balance sheet, net of own funds and deposits
average annual liabilities recorded on the balance sheet net of own funds and of deposits covered
covered by the guarantee of the Deposit Guarantee Fund, approved by Law No. 7-A/2016, of 30 March and by Ordinance No. 165-
by the guarantee of the Deposit Guarantee Fund and on the national amount of derivative financial
A/2016, of 14 June.
instruments, and whose regime has been extended.
to which the surcharge relates. A transitional regime was established for the year 2020 and 2021,
the settlement of which was carried out in accordance with the following rules: (i)The reserve base is
calculated by reference to the half-yearly average of the final balances of each month, which correspond
in the accounts for the first half of 2020, in the case of the solidarity surcharge due in 2020, and in the
accounts for the second half of 2020 in the case of the solidarity surcharge due in 2021, published in
compliance with the obligation established in Bank of Portugal Notice No. 1/2019; (ii) Settlement is
carried out by the taxable person through the declaration to be sent until 15 December 2020 and 2021,
respectively, with payment due on the same dates.
As at 31 December 2021, novobanco Group recognized Banking Levy charges as a cost in the amount
of Euro 28,893 thousand (31 December 2020: Euro 27,439 thousand). The cost recognized as at 31
December 2021 has been calculated and paid based on the maximum rate of 0.110% levied on the
average annual liabilities recorded on the balance sheet, net of own funds and deposits covered by
the guarantee of the Deposit Guarantee Fund, approved by Law No. 7-A/2016, of 30 March and by
Ordinance No. 165-A/2016, of 14 June.
In 2020, following one of the measures provided for in Economic and Social Stabilization Program (SSPE) and following the art. 18
of Law no. 27 -A / 2020, of July 24, the Solidarity Additional on the Banking Sector was created, which, similarly to what happens with
the Contribution on the Banking Sector, is levied on the average annual liability calculated balance sheet deducted from own funds
and deposits covered by the Deposit Guarantee Fund guarantee and on the notional value of derivative financial instruments. Its
settlement is carried out until the end of June of the year following the year to which the surcharge relates. A transitional regime was
established for the year 2020 and 2021, the settlement of which was carried out in accordance with the following rules: (i)The reserve
base is calculated by reference to the half-yearly average of the final balances of each month, which correspond in the accounts for
the first half of 2020, in the case of the solidarity surcharge due in 2020, and in the accounts for the second half of 2020 in the case
of the solidarity surcharge due in 2021, published in compliance with the obligation established in Bank of Portugal Notice No. 1/2019;
(ii) Settlement is carried out by the taxable person through the declaration to be sent until 15 December 2020 and 2021, respectively,
with payment due on the same dates.
NOTE 16 – STAFF EXPENSES
As at 31 December 2021, the Bank recognized as an expense in relation to the Solidarity Additional on the Banking Sector the amount
The breakdown of these captions is as follows:
of Euro 5,194 thousand (31 December 2020: Euro 5,313 thousand). The recognized expense was calculated and paid based on the
maximum rate of 0.02% which is levied on the average annual liability calculated on the balance sheet less the own funds and
deposits covered by the Deposit Guarantee Fund guarantee.
In 2020, following one of the measures provided for in Economic and Social Stabilization Program
(SSPE) and following the art. 18 of Law no. 27 -A / 2020, of July 24, the Solidarity Additional on the
Banking Sector was created, which, similarly to what happens with the Contribution on the Banking
Sector, is levied on the average annual liability calculated balance sheet deducted from own funds and
deposits covered by the Deposit Guarantee Fund guarantee and on the notional value of derivative
financial instruments. Its settlement is carried out until the end of June of the year following the year
As at 31 December 2021, the Bank recognized as an expense in relation to the Solidarity Additional on
the Banking Sector the amount of Euro 5,194 thousand (31 December 2020: Euro 5,313 thousand). The
recognized expense was calculated and paid based on the maximum rate of 0.02% which is levied on
the average annual liability calculated on the balance sheet less the own funds and deposits covered
by the Deposit Guarantee Fund guarantee.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 46 -
203
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 16 – STAFF EXPENSES
The breakdown of these captions is as follows:
NOTE 16 – STAFF EXPENSES
The breakdown of these captions is as follows:
NOTE 16 – STAFF EXPENSES
Wages and salaries
Remuneration
The breakdown of these captions is as follows:
Long-term service / Career bonuses (see Note 17)
Mandatory social charges
Wages and salaries
Costs with post-employment benefits (see Note 17)
Other costs
Wages and salaries
Remuneration
Long-term service / Career bonuses (see Note 17)
Remuneration
Mandatory social charges
Long-term service / Career bonuses (see Note 17)
Costs with post-employment benefits (see Note 17)
Mandatory social charges
Other costs
Costs with post-employment benefits (see Note 17)
Other costs
(in thousands of Euros)
31.12.2021
31.12.2020
31.12.2021
(in thousands of Euros)
31.12.2020
(in thousands of Euros)
31.12.2021
31.12.2020
179 007
178 468
539
49 365
179 007
946
178 468
3 943
179 007
539
233 261
178 468
49 365
539
946
49 365
3 943
946
233 261
3 943
183 818
182 867
951
55 250
183 818
1 735
182 867
4 803
183 818
951
245 606
182 867
55 250
951
1 735
55 250
4 803
1 735
245 606
4 803
The provisions and costs related to the restructuring process are presented in Note 34.
The provisions and costs related to the restructuring process are presented in Note 34.
As at 31 December 2021 and 2020, the number of employees of novobanco Group has the following breakdown:
As at 31 December 2021 and 2020, the number of employees of novobanco Group has the following breakdown:
The provisions and costs related to the restructuring process are presented in Note 34.
233 261
31.12.2021
245 606
31.12.2020
Novo Banco employees
Employees of the Group's subsidiaries
As at 31 December 2021 and 2020, the number of employees of novobanco Group has the following breakdown:
The provisions and costs related to the restructuring process are presented in Note 34.
3 918
275
As at 31 December 2021 and 2020, the number of employees of novobanco Group has the following breakdown:
4 193
Total employees of the Group
31.12.2021
Novo Banco employees
Employees of the Group's subsidiaries
Novo Banco employees
Total employees of the Group
Employees of the Group's subsidiaries
By professional category, the number of employees at novobanco Group is analyzed as follows:
31.12.2021
3 918
275
3 918
4 193
275
4 256
326
31.12.2020
4 582
31.12.2020
4 256
326
4 256
4 582
326
Total employees of the Group
31.12.2021
4 193
31.12.2020
4 582
By professional category, the number of employees at novobanco Group is analysed as follows:
By professional category, the number of employees at novobanco Group is analysed as follows:
By professional category, the number of employees at novobanco Group is analyzed as follows:
Senior management functions
Middle management positions
Specific positions
Administrative and other functions
Senior management functions
Middle management positions
Specific positions
Senior management functions
Administrative and other functions
Middle management positions
Specific positions
Administrative and other functions
NOTE 17 – EMPLOYEE BENEFITS
31.12.2021
31.12.2020
31.12.2021
31.12.2020
469
456
1 980
1 288
469
4 193
456
1 980
469
1 288
456
1 980
4 193
1 288
472
513
2 175
1 422
472
4 582
513
2 175
472
1 422
513
2 175
4 582
1 422
Pension and health-care benefits
4 193
4 582
NOTE 17 – EMPLOYEE BENEFITS
As mentioned in accounting policy 7.27, the Group has undertaken to provide its employees, or their families, with cash benefits for
old-age retirement, disability and survivors' pensions and other liabilities such as a Serviço de Assistência Médico-Social (SAMS),
NOTE 17 – EMPLOYEE BENEFITS
Pension and health-care benefits
managed by the Union.
NOTE 17 – EMPLOYEE BENEFITS
As mentioned in accounting policy 7.27, the Group has undertaken to provide its employees, or their families, with cash benefits for
Pension and health-care benefits
For employees hired until 31 December 2008, the retirement pension and the disability, survival and death pensions consecrated
old-age retirement, disability and survivors' pensions and other liabilities such as a Serviço de Assistência Médico-Social (SAMS),
under the ACT, as well as the liabilities for health-care benefits (SAMS), are covered by a closed pension fund, managed by GNB –
managed by the Union.
As mentioned in accounting policy 7.27, the Group has undertaken to provide its employees, or their families, with cash benefits for
Sociedade Gestora de Fundos de Pensões, S.A.
old-age retirement, disability and survivors' pensions and other liabilities such as a Serviço de Assistência Méd ico-Social (SAMS),
Pension and health-care benefits
For employees hired until 31 December 2008, the retirement pension and the disability, survival and death pensions consecrated
managed by the Union.
Protection of employees in the event of maternity, paternity and adoption, as well as old age, is covered by the General Social Security
As mentioned in accounting policy 7.27, the Group has undertaken to provide its employees, or their
under the ACT, as well as the liabilities for health-care benefits (SAMS), are covered by a closed pension fund, managed by GNB –
Regime, given that with the publication of Decree-Law No. 1-A/2011, of 3 January, all banking employees who were beneficiaries of
families, with cash benefits for old-age retirement, disability and survivors’ pensions and other liabilities
Sociedade Gestora de Fundos de Pensões, S.A.
For employees hired until 31 December 2008, the retirement pension and the disability, survival and death pensions consecrate d
“CAFEB – Caixa de Abono de Família dos Empregados Bancários” were integrated in the General Social Security Regime as from
under the ACT, as well as the liabilities for health-care benefits (SAMS), are covered by a closed pension fund, managed by GNB –
such as a Serviço de Assistência Médico-Social (SAMS), managed by the Union.
1 January 2011.
Protection of employees in the event of maternity, paternity and adoption, as well as old age, is covered by the General Social Security
Sociedade Gestora de Fundos de Pensões, S.A.
Regime, given that with the publication of Decree-Law No. 1-A/2011, of 3 January, all banking employees who were beneficiaries of
Employees hired after 31 December 2008 are covered by the Portuguese General Social Security Regime.
“CAFEB – Caixa de Abono de Família dos Empregados Bancários” were integrated in the General Social Security Regime as from
Protection of employees in the event of maternity, paternity and adoption, as well as old age, is covered by the General Soci al Security
1 January 2011.
Regime, given that with the publication of Decree-Law No. 1-A/2011, of 3 January, all banking employees who were beneficiaries of
Retirement pensions of banking employees integrated in the General Social Security Regime within the scope of the 2nd tripartite
“CAFEB – Caixa de Abono de Família dos Empregados Bancários” were integrated in the General Social Security Regime as from
agreement continue to be calculated in accordance with the provisions of the ACT and other conventions; however, banking
Employees hired after 31 December 2008 are covered by the Portuguese General Social Security Regime.
1 January 2011.
employees are entitled to receive a pension under the General Regime that considers the number of years of contributions under that
regime. The Banks are responsible for the difference between the pension determined in accordance with the provisions of the ACT
Retirement pensions of banking employees integrated in the General Social Security Regime within the scope of the 2nd tripartite
Employees hired after 31 December 2008 are covered by the Portuguese General Social Security Regime.
and that which the banking employees are entitled to receive from the General Social Security Regime.
agreement continue to be calculated in accordance with the provisions of the ACT and other conventions; however, banking
employees are entitled to receive a pension under the General Regime that considers the number of years of contributions under that
Retirement pensions of banking employees integrated in the General Social Security Regime within the scope of the 2nd tripart ite
The contribution rate is 26.6%, 23.6% paid by the employer and 3% paid by the employees on the behalf of Caixa de Abono de
regime. The Banks are responsible for the difference between the pension determined in accordance with the provisions of the ACT
agreement continue to be calculated in accordance with the provisions of the ACT and other conventions; however, banking
Família dos Empregados Bancários (CAFEB), abolished by said Decree-law. In consequence of this change, pension entitlements
and that which the banking employees are entitled to receive from the General Social Security Regime.
employees are entitled to receive a pension under the General Regime that considers the number of years of contri butions under that
of active employees are to be covered on the terms defined under the General Social Security Regime, for the length of their
For employees hired until 31 December 2008, the retirement pension and the disability, survival and
death pensions consecrated under the ACT, as well as the liabilities for health-care benefits (SAMS), are
covered by a closed pension fund, managed by GNB – Sociedade Gestora de Fundos de Pensões, S.A.
regime. The Banks are responsible for the difference between the pension determined in accordance with the provisions of the ACT
The contribution rate is 26.6%, 23.6% paid by the employer and 3% paid by the employees on the behalf of Caixa de Abono de
and that which the banking employees are entitled to receive from the General Social Security Regime.
Família dos Empregados Bancários (CAFEB), abolished by said Decree-law. In consequence of this change, pension entitlements
of active employees are to be covered on the terms defined under the General Social Security Regime, for the length of their
The contribution rate is 26.6%, 23.6% paid by the employer and 3% paid by the employees on the behalf of Caixa de Abono de
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Família dos Empregados Bancários (CAFEB), abolished by said Decree-law. In consequence of this change, pension entitlements
- 47 -
of active employees are to be covered on the terms defined under the General Social Security Regime, for the length of their
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 47 -
- 48 -
Protection of employees in the event of maternity, paternity and adoption, as well as old age, is covered
by the General Social Security Regime, given that with the publication of Decree-Law No. 1-A/2011, of
3 January, all banking employees who were beneficiaries of “CAFEB – Caixa de Abono de Família dos
Empregados Bancários” were integrated in the General Social Security Regime as from 1 January 2011.
Employees hired after 31 December 2008 are covered by the Portuguese General Social Security
Regime.
Retirement pensions of banking employees integrated in the General Social Security Regime within the
scope of the 2nd tripartite agreement continue to be calculated in accordance with the provisions of
the ACT and other conventions; however, banking employees are entitled to receive a pension under
204
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
the General Regime that considers the number of years of contributions under that regime. The Banks
are responsible for the difference between the pension determined in accordance with the provisions of
the ACT and that which the banking employees are entitled to receive from the General Social Security
Regime.
The contribution rate is 26.6%, 23.6% paid by the employer and 3% paid by the employees on the
behalf of Caixa de Abono de Família dos Empregados Bancários (CAFEB), abolished by said Decree-
law. In consequence of this change, pension entitlements of active employees are to be covered on the
terms defined under the General Social Security Regime, for the length of their employment between
1 January 2011 and their retirement date. The differential required to make up the pension guaranteed
under the ACT is paid by the Banks.
At the end of financial year 2011 and pursuant to the 3rd tripartite agreement, it was decided to transfer,
definitively and irreversibly, to the General Social Security Regime all the banks’ liabilities with pensions
in payment to retirees and pensioners that were in that condition as at 31 December 2011 at constant
values (0% discount rate) for the component foreseen in the “Instrumento de Regulação Coletiva de
Trabalho” (IRCT) applicable to banking employees, including the eventualities of death, disability and
survival. The liabilities relating to the updating of pension amounts, pension benefits other than those
to be borne by Social Security, health-care contributions to SAMS, death allowances and deferred
survivor’s pensions will remain under the banks’ responsibility, with the corresponding funding being
met through the respective pension funds.
To quantify the amounts relating to the split of the Pension Fund assets allocated to the liabilities that
remained in BES, following the decision of Bank of Portugal of 11 February 2015, from those that were
transferred to novobanco, the assets existing on 3 August 2014 were split in proportion to the liabilities
calculated on the same date, allocated to each of the groups of former participants and beneficiaries
allocated to each of the entities. The split performed on these terms will result, on 3 August 2014, in a
level of funding of the Complementary Plan of the Executive Commission that is equal for each of the
associates of the Fund (novobanco and BES).
On June 16, 2020, the Insurance and Pension Funds Supervisory Authority (“ASF”) approved the
extinction of the portion that finances the Plan of the former Executive Committee and, simultaneously,
the amendment of the Constitutive Contract of the novobanco Pension Fund. This approval led to the
creation of three aspects of the Executive Committee’s Pension Plan: (i) Executive Committee - BES,
(ii) Executive Committee - novobanco and (iii) Undivided Party. The assets of the undivided party are
not allocated to any liability of novobanco or BES until the final decision of the court (limit of article
402º), so novobanco transferred the amount of Euro 19.2 million of net liabilities of the amount of the
fund’s assets relating to the undivided portion for Provisions.
On 1 June 2016, an amendment was made to Fundo de Pensões NB´s constitutive contract, where the
complementary plan became a defined contribution instead of a defined benefit plan. Considering this,
and in accordance with IAS 19, this plan´s responsibilities and assets are net of the amounts presented
for the defined benefit plans.
The agreement further established that the financial institutions’ pension fund assets relating to the
part allocated to the satisfaction responsibilities for those pensions, be transferred to the State.
On 31 December 2021, the amount of Euro 553 thousand was recorded in Personnel Costs related to
the defined contribution plan (31 December 2020: Euro 535 thousand).
According to the deliberation of the Board of Directors of Bank of Portugal of 3 August 2014 (8 p.m.),
considering the resolution by the same Board of Directors of 11 August 2014 (5 p.m.), and the additional
clarifications contained in the deliberation of the Board of Directors of Bank of Portugal, of 11 February
2015, it was clarified that the BES responsibilities not transferred to novobanco relate to the retirement
and survival pensions and complementary retirement and survival pensions of the Directors of BES who
had been members of its Executive Committee, as defined in BES’s Articles of Association and BES’s
General Assembly Regulations to which the Articles of Association refer, not having, therefore, been
transferred to novobanco, without prejudice to the transfer of the responsibilities relating exclusively
to the employment contracts with BES.
Given the aforementioned, liabilities arising exclusively from the employment contracts with BES were
transferred to novobanco. Considering the foregoing, only the pension fund liabilities arising from the
Complementary Executive Committee Plan were split, with a part (described above) remaining in BES,
with the other part being transferred to novobanco, together with the Pension Fund’s liabilities relating
to the Base Plan and the Complementary Plan.
During 2021, two changes were made to the Pension Fund:
• Inclusion of Social Security Pension – Pensioners
Until 2020, the methodology applied considered pensions in payment by the Pension Fund for the
calculation of liabilities with pensioners. In 2021, this methodology was changed for pensioners who
started a pension after 2011, and do not have a Social Security pension. For this group of pensioners
with age below the normal retirement age of the General Social Security Regime (RGSS), the liability
arising from a Social Security pension, to be paid from the normal retirement age of the RGSS, was
deducted. As for pensioners over the normal retirement age of the RGSS, the liability arising from a
Social Security pension, to be paid from the moment of assessment, was deducted.
• Inclusion of acquired rights (Clause 98 ACT)
In 2021, liabilities with former employees who left novobanco Group after 2011, and who can claim
rights to the Pension Fund under Clause 98 of the ACT, were included.
Pension plan participants are detailed as follows:
Pension plan participants are detailed as follows:
205
Employees
Pensioners and survivors
Participants under clause 98
TOTAL
31.12.2021
31.12.2020
4 095
6 997
990
4 417
6 949
-
12 082
11 366
The Group's liabilities and coverage levels, calculated in accordance with the accounting policy defined in Note 7.27 - Employee
benefits, reportable as of December 31, 2021 and 2020 are analyzed as follows:
Assets / (liabilities) recognized in the balance sheet
Total liabilities
Pensioners
Employees
Coverage
Fair value of plan assets
Net assets / (liabilities) in the balance sheet (See Notes 29 and 33)
Accumulated actuarial deviations recognized in other comprehensive income
According to the policy defined in Note 7.27 - Employee Benefits, the Group calculates liabilities for pensions and actuarial gains and
losses half-yearly and evaluates at each balance sheet date and for each plan separately, the recoverability of the excess of the
respective pension liabilities.
The evolution of the actuarial gains and losses in the balance sheet can be analysed as follows:
Retirement pension liabilities at beginning of the exercise
1 934 668
1 848 930
(in thousand Euros)
31.12.2021
31.12.2020
(1 929 188)
(1 334 872)
( 594 316)
(1 934 668)
(1 368 021)
( 566 647)
1 907 928
1 907 616
( 21 260)
799 052
( 27 052)
723 723
(in thousands of Euros)
31.12.2021
31.12.2020
434
18 836
2 656
219
10 612
46 984
( 76 269)
-
38 562
( 37 187)
( 10 327)
425
23 870
2 617
238
101 787
50 737
( 73 073)
( 54 679)
32 902
-
914
Current service cost
Interest cost
Plan participants' contribution
Contributions from other entities
Actuarial (gains) / losses in the exercise:
- Changes in financial assumptions
- Experience adjustments (gains) / losses
Transfer to private party
Early retirement
Social Security and clause 98
Foreign exchange differences and other (1)
Pensions paid by the fund / transfers and once-off bonuses
Retirement pension liabilities at end of the exercise
1 929 188
1 934 668
(1) Includes Euro 13,019 thousand resulting from the conclusion of the sale of assets and liabilities of the Spanish branch
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 49 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Pension plan participants are detailed as follows:
Pension plan participants are detailed as follows:
Employees
Pensioners and survivors
Participants under clause 98
Employees
TOTAL
Pensioners and survivors
Participants under clause 98
31.12.2021
31.12.2020
31.12.2021
4 095
6 997
990
4 095
12 082
6 997
990
31.12.2020
4 417
6 949
-
4 417
11 366
6 949
-
The Group’s liabilities and coverage levels, calculated in accordance with the accounting policy defined
in Note 7.27 - Employee benefits, reportable as of December 31, 2021 and 2020 are analysed as follows:
The Group's liabilities and coverage levels, calculated in accordance with the accounting policy defined in Note 7.27 - Employee
benefits, reportable as of December 31, 2021 and 2020 are analysed as follows:
11 366
12 082
TOTAL
(in thousand Euros)
The Group's liabilities and coverage levels, calculated in accordance with the accounting policy defined in Note 7.27 - Employee
benefits, reportable as of December 31, 2021 and 2020 are analyzed as follows:
31.12.2020
31.12.2021
Assets / (liabilities) recognized in the balance sheet
Total liabilities
Pensioners
Assets / (liabilities) recognized in the balance sheet
Employees
Total liabilities
Coverage
Pensioners
Fair value of plan assets
Employees
Net assets / (liabilities) in the balance sheet (See Notes 29 and 33)
Coverage
Fair value of plan assets
Accumulated actuarial deviations recognized in other comprehensive income
Net assets / (liabilities) in the balance sheet (See Notes 29 and 33)
(in thousand Euros)
31.12.2021
(1 929 188)
31.12.2020
(1 934 668)
(1 334 872)
( 594 316)
(1 929 188)
(1 334 872)
1 907 928
( 594 316)
( 21 260)
1 907 928
799 052
( 21 260)
(1 368 021)
( 566 647)
(1 934 668)
(1 368 021)
1 907 616
( 566 647)
( 27 052)
1 907 616
723 723
( 27 052)
According to the policy defined in Note 7.27 - Employee Benefits, the Group calculates liabilities for
pensions and actuarial gains and losses half-yearly and evaluates at each balance sheet date and for
each plan separately, the recoverability of the excess of the respective pension liabilities.
According to the policy defined in Note 7.27 - Employee Benefits, the Group calculates liabilities for pensions and actuarial gains and
Accumulated actuarial deviations recognized in other comprehensive income
losses half-yearly and evaluates at each balance sheet date and for each plan separately, the recoverability of the excess of the
respective pension liabilities.
According to the policy defined in Note 7.27 - Employee Benefits, the Group calculates liabilities for pensions and actuarial gains and
losses half-yearly and evaluates at each balance sheet date and for each plan separately, the recoverability of the excess of the
The evolution of the actuarial gains and losses in the balance sheet can be analysed as follows:
respective pension liabilities.
799 052
723 723
The evolution of the actuarial gains and losses in the balance sheet can be analysed as follows:
The evolution of the actuarial gains and losses in the balance sheet can be analysed as follows:
Retirement pension liabilities at beginning of the exercise
Current service cost
Interest cost
Retirement pension liabilities at beginning of the exercise
Plan participants' contribution
Current service cost
Contributions from other entities
Interest cost
Actuarial (gains) / losses in the exercise:
Plan participants' contribution
- Changes in financial assumptions
Contributions from other entities
- Experience adjustments (gains) / losses
Actuarial (gains) / losses in the exercise:
Pensions paid by the fund / transfers and once-off bonuses
- Changes in financial assumptions
Transfer to private party
- Experience adjustments (gains) / losses
Early retirement
Pensions paid by the fund / transfers and once-off bonuses
Social Security and clause 98
Transfer to private party
Foreign exchange differences and other (1)
Early retirement
Social Security and clause 98
Retirement pension liabilities at end of the exercise
Foreign exchange differences and other (1)
(1) Includes Euro 13,019 thousand resulting from the conclusion of the sale of assets and liabilities of the Spanish branch
(in thousands of Euros)
31.12.2021
31.12.2020
(in thousands of Euros)
1 934 668
31.12.2021
1 848 930
31.12.2020
434
18 836
1 934 668
2 656
434
219
18 836
2 656
10 612
219
46 984
( 76 269)
10 612
-
46 984
38 562
( 76 269)
( 37 187)
-
( 10 327)
38 562
( 37 187)
1 929 188
( 10 327)
425
23 870
1 848 930
2 617
425
238
23 870
2 617
101 787
238
50 737
( 73 073)
101 787
( 54 679)
50 737
32 902
( 73 073)
-
( 54 679)
914
32 902
-
1 934 668
914
Retirement pension liabilities at end of the exercise
1 929 188
1 934 668
(1) Includes Euro 13,019 thousand resulting from the conclusion of the sale of assets and liabilities of the Spanish branch
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 50 -
- 49 -
206
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The evolution of the value of pension funds in the years ended 31 December 2021 and 2020 can be
analysed as follows:
The evolution of the value of pension funds in the years ended 31 December 2021 and 2020 can be analysed as follows:
(in thousands of Euros)
The evolution of the value of pension funds in the years ended 31 December 2021 and 2020 can be analysed as follows:
Fair value of fund assets at beginning of exercise
1 907 616
31.12.2021
31.12.2020
The evolution of the value of pension funds in the years ended 31 December 2021 and 2020 can be analyzed as follows:
Net return from the fund
- Share of the net interest on the assets
Fair value of fund assets at beginning of exercise
- Return on assets excluding net interest
Net return from the fund
Net return from the fund
Fair value of fund assets at beginning of exercise
- Share of the net interest on the assets
- Return on assets excluding net interest
- Share of the net interest on the assets
- Return on assets excluding net interest
Group contributions
Plan participants’ contributions
Pensions paid by the fund / transfers and once-off bonuses
Transfer to Undivided Party
Foreign exchange differences and other (1)
Group contributions
Plan participants’ contributions
Pensions paid by the fund / transfers and once-off bonuses
Group contributions
Transfer to Undivided Party
Plan participants’ contributions
Foreign exchange differences and other (1)
Pensions paid by the fund / transfers and once-off bonuses
Transfer to Undivided Party
Pension fund assets can be analysed as follows:
Foreign exchange differences and other (1)
Fund balance at the end of the year
(1) Includes Euros 13,019 thousand from the assets and liabilities sale of the Spanish branch .
Fund balance at the end of the year
(1) Includes Euros 13,019 thousand from the assets and liabilities sale of the Spanish branch .
Pension fund assets can be analyzed as follows:
Fund balance at the end of the year
Total
(1) Includes Euros 13,019 thousand from the assets and liabilities sale of the Spanish branch .
Quoted
Pension fund assets can be analysed as follows:
31.12.2021
Unquoted
Equity instruments
Debt instruments
Pension fund assets can be analyzed as follows:
238
31.12.2021
15 928
1 907 616
( 15 690)
31.12.2021
86 708
238
1 907 616
2 656
15 928
( 76 269)
( 15 690)
238
-
86 708
15 928
2 656
( 15 690)
( 76 269)
86 708
-
2 656
( 76 269)
-
1 907 928
( 13 021)
( 13 021)
1 907 928
( 13 021)
(in thousands of Euros)
1 695 857
1 695 857
(in thousands of Euros)
47 403
31.12.2020
19 891
1 695 857
27 512
31.12.2020
269 419
47 403
2 617
19 891
( 73 073)
27 512
( 35 523)
269 419
916
2 617
( 73 073)
( 35 523)
47 403
19 891
27 512
269 419
2 617
( 73 073)
916
( 35 523)
1 907 616
1 907 616
916
914
1 187 975
Quoted
279 949
51 215
31.12.2021
-
Unquoted
103 278
52 129
1 187 975
Total
383 227
914
63
Quoted
1 187 975
-
279 949
914
-
1 187 975
63
-
279 949
-
31.12.2021
51 215
15
Unquoted
-
74
51 215
103 278
150 344
52 129
78
Total
1 187 975
74
383 227
150 344
52 129
134 101
-
15
103 278
74
134 101
1 187 975
78
383 227
74
(in thousands of Euros)
Quoted
39 710
1 907 928
31.12.2020
Unquoted
Total
1 907 616
(in thousands of Euros)
39 710
-
1 105 727
Quoted
324 480
31.12.2020
Unquoted
-
1 105 727
Total
395 969
(in thousands of Euros)
39 710
66
Quoted
1 105 727
-
39 710
-
1 105 727
66
-
324 480
-
324 480
71 489
31.12.2020
-
31
Unquoted
-
75
71 489
115 855
250 183
31
71 489
75
39 710
97
Total
1 105 727
-
115 855
-
250 183
75
395 969
1 105 727
97
395 969
75
39 710
1 468 901
63
-
439 027
150 344
15
1 907 928
150 344
78
1 469 983
66
-
437 633
115 855
31
1 907 616
115 855
97
-
-
134 101
74
134 101
74
-
-
250 183
75
250 183
75
The pension fund assets used by the Group or representative of securities issued by entities of the Group are detailed as fol lows:
1 468 901
1 907 928
1 469 983
1 907 616
439 027
437 633
Total
-
-
150 344
134 101
150 344
134 101
-
-
115 855
115 855
250 183
250 183
Cash and cash equivalents
Total
1 907 616
The pension fund assets used by the Group or representative of securities issued by entities of the Group are detailed as fol lows:
1 469 983
31.12.2021
437 633
31.12.2020
1 468 901
1 907 928
439 027
(in thousands of Euros)
The pension fund assets used by the Group or representative of securities issued by entities of the
Group are detailed as follows:
The pension fund assets used by the Group or representative of securities issued by entities of the Group are detailed as follows:
(in thousands of Euros)
Investment funds
Equity instruments
Structured debt
Debt instruments
Derivatives
Equity instruments
Investment funds
Real estate properties
Debt instruments
Cash and cash equivalents
Investment funds
Structured debt
Derivatives
Total
Structured debt
Real estate properties
Derivatives
Cash and cash equivalents
Real estate properties
Cash and cash equivalents
Participation units
Real estate properties
Total
Cash and cash equivalents
Participation units
Cash and cash equivalents
Real estate properties
Participation units
Real estate properties
Total
41 827
86 684
31.12.2021
43 032
63 627
131 265
31.12.2020
63 630
(in thousands of Euros)
171 543
41 827
31.12.2021
86 684
43 032
41 827
86 684
43 032
258 522
63 627
31.12.2020
131 265
63 630
63 627
131 265
63 630
The key actuarial assumptions used to calculate retirement pension and health-care liabilities are identical and are as follows:
171 543
258 522
Total
258 522
The key actuarial assumptions used to calculate retirement pension and health-care liabilities are identical and are as follows:
171 543
31.12.2021
31.12.2020
Assumptions
The key actuarial assumptions used to calculate retirement pension and health-care liabilities are identical and are as follows:
Assumptions
Actual
Actual
Actuarial Assumptions
31.12.2021
31.12.2020
Assumptions
1.00%
1.00%
0.25%
0.50%
Assumptions
1.00%
1.00%
TV 88/90
Actual
2.41%
-
31.12.2020
1.34%
3.07%
2.41%
-
Actual
Projected rate of return on plan assets
Discount rate
Actuarial Assumptions
Pension increase rate
Salary increase rate
Projected rate of return on plan assets
Mortality table men
Discount rate
Actuarial Assumptions
Mortality table women
Pension increase rate
Projected rate of return on plan assets
Salary increase rate
Discount rate
Mortality table men
Pension increase rate
Mortality table women
Salary increase rate
of the liabilities.
Mortality table men
Mortality table women
Assumptions
1.35%
1.35%
0.50%
0.75%
Assumptions
1.35%
1.35%
TV 88/90
Actual
-0.24%
-
31.12.2021
0.36%
2.05%
-0.24%
-
Actual
Disability decreases are not considered in the calculation of the liabilities. The determination of the discount rate as at 3 1 December
2021 and 31 December 2020 was based on: (i) the evolution of the main indices for high quality corporate bonds and (ii) the duration
0.50%
TV 88/90-3 years
1.35%
0.36%
-0.24%
0.75%
1.35%
2.05%
-
0.50%
TV 88/90
0.75%
TV 88/90-3 years
0.36%
2.05%
TV 88/90
TV 88/90-2 years
0.25%
TV 88/90-2 years
1.00%
1.34%
2.41%
0.50%
1.00%
3.07%
-
0.25%
TV 88/90
0.50%
TV 88/90-2 years
1.34%
3.07%
TV 88/90
TV 88/90-2 years
Disability decreases are not considered in the calculation of the liabilities. The determination of the discount rate as at 3 1 December
2021 and 31 December 2020 was based on: (i) the evolution of the main indices for high quality corporate bonds and (ii) the duration
of the liabilities.
Disability decreases are not considered in the calculation of the liabilities. The determination of the discount rate as at 31 December
2021 and 31 December 2020 was based on: (i) the evolution of the main indices for high quality corporate bonds and (ii) the duration
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 51 -
of the liabilities.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 51 -
- 50 -
207
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The evolution of the value of pension funds in the years ended 31 December 2021 and 2020 can be analysed as follows:
Fair value of fund assets at beginning of exercise
Net return from the fund
- Share of the net interest on the assets
- Return on assets excluding net interest
Group contributions
Plan participants’ contributions
Transfer to Undivided Party
Foreign exchange differences and other (1)
Fund balance at the end of the year
Pensions paid by the fund / transfers and once-off bonuses
(1) Includes Euros 13,019 thousand from the assets and liabilities sale of the Spanish branch .
Pension fund assets can be analysed as follows:
(in thousands of Euros)
31.12.2021
31.12.2020
1 907 616
1 695 857
238
15 928
( 15 690)
86 708
2 656
( 76 269)
-
( 13 021)
47 403
19 891
27 512
269 419
2 617
( 73 073)
( 35 523)
916
1 907 928
1 907 616
Quoted
Total
Quoted
31.12.2021
Unquoted
31.12.2020
Unquoted
914
51 215
52 129
1 187 975
-
1 187 975
279 949
103 278
383 227
39 710
1 105 727
324 480
63
-
-
-
15
74
150 344
134 101
78
74
150 344
134 101
66
-
-
-
(in thousands of Euros)
Total
-
-
39 710
1 105 727
71 489
395 969
31
75
97
75
115 855
115 855
250 183
250 183
Total
1 468 901
439 027
1 907 928
1 469 983
437 633
1 907 616
The pension fund assets used by the Group or representative of securities issued by entities of the Group are detailed as fol lows:
Equity instruments
Debt instruments
Investment funds
Structured debt
Derivatives
Real estate properties
Cash and cash equivalents
Cash and cash equivalents
Participation units
Real estate properties
Total
(in thousands of Euros)
31.12.2021
31.12.2020
41 827
86 684
43 032
63 627
131 265
63 630
171 543
258 522
The key actuarial assumptions used to calculate retirement pension and health-care liabilities are
identical and are as follows:
The key actuarial assumptions used to calculate retirement pension and health-care liabilities are identical and are as follows:
Actuarial Assumptions
Projected rate of return on plan assets
Discount rate
Pension increase rate
Salary increase rate
Mortality table men
Mortality table women
31.12.2021
31.12.2020
Assumptions
Actual
Assumptions
Actual
1.35%
1.35%
0.50%
0.75%
-0.24%
-
0.36%
2.05%
1.00%
1.00%
0.25%
0.50%
2.41%
-
1.34%
3.07%
TV 88/90
TV 88/90-3 years
TV 88/90
TV 88/90-2 years
Disability decreases are not considered in the calculation of the liabilities. The determination of the discount rate as at 3 1 December
2021 and 31 December 2020 was based on: (i) the evolution of the main indices for high quality corporate bonds and (ii) the duration
of the liabilities.
Disability decreases are not considered in the calculation of the liabilities. The determination of the
discount rate as at 31 December 2021 and 31 December 2020 was based on: (i) the evolution of the
main indices for high quality corporate bonds and (ii) the duration of the liabilities.
As at 31 December 2021 and 2020, the sensitivity analysis to a 0.25% change in the assumptions rate
used and one year in the mortality table results in the following changes in the current value of liabilities
determined for past services:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As at 31 December 2021 and 2020, the sensitivity analysis to a 0.25% change in the assumptions rate used and one year in the
mortality table results in the following changes in the current value of liabilities determined for past services:
- 51 -
As at 31 December 2021 and 2020, the sensitivity analysis to a 0.25% change in the assumptions rate used and one year in the
mortality table results in the following changes in the current value of liabilities determined for past services:
Change in the amount of liabilities due to the change:
(in thousands of Euros)
Assumptions
31.12.2021
31.12.2020
Assumptions
Discount rate
Salary increase rate
Pension increase rate
Discount rate
Salary increase rate
Pension increase rate
Mortality table
of +0.25% in the
rate used
Change in the amount of liabilities due to the change:
of -0.25% in the
rate used
of +0.25% in the
rate used
(in thousands of Euros)
of -0.25% in the
rate used
31.12.2021
31.12.2020
( 73 171)
of +0.25% in the
13 507
rate used
77 795
of -0.25% in the
( 13 009)
rate used
( 73 282)
of +0.25% in the
26 643
rate used
78 127
of -0.25% in the
( 16 935)
rate used
68 855
( 73 171)
( 64 469)
77 795
57 714
( 73 282)
( 52 943)
78 127
in +1 year
13 507
in -1 year
( 13 009)
in +1 year
26 643
in -1 year
( 16 935)
68 855
( 68 096)
( 64 469)
68 413
57 714
( 70 811)
( 52 943)
71 808
in +1 year
in -1 year
in +1 year
in -1 year
The evolution of actuarial deviations on the balance sheet can be analyzed as follows:
Mortality table
( 68 096)
68 413
( 70 811)
71 808
The evolution of actuarial deviations on the balance sheet can be analyzed as follows:
The evolution of actuarial deviations on the balance sheet can be analysed as follows:
Accumulated actuarial losses recognized in other comprehensive income at the beginning of the exercise
Actuarial (gains) / losses in the exercise:
- Changes in assumptions
Accumulated actuarial losses recognized in other comprehensive income at the beginning of the exercise
- Financial assumptions
(in thousands of Euros)
31.12.2021
31.12.2020
723 723
(in thousands of Euros)
599 454
31.12.2021
31.12.2020
723 723
10 612
62 674
2 043
599 454
101 787
23 225
( 743)
- Plan assets return (excluding net of interests)
Other
Actuarial (gains) / losses in the exercise:
- Changes in assumptions
- Financial assumptions
Accumulated actuarial losses recognized in other comprehensive income at the end of the exercise
- Plan assets return (excluding net of interests)
Other
101 787
23 225
( 743)
The costs of retirement pensions and health benefits for the years ended 31 December 2021 and 2020 can be analyzed as follows:
723 723
(in thousand of Euros)
Accumulated actuarial losses recognized in other comprehensive income at the end of the exercise
10 612
62 674
2 043
799 052
799 052
723 723
208
31.12.2021
30.06.2020
425
434
31.12.2021
31.12.2020
The costs of retirement pensions and health benefits for the years ended 31 December 2021 and 2020 can be analysed as follows:
Current service cost
(in thousand of Euros)
Net interest
Early retirements
Current service cost
425
3 979
1 310
434
2 908
512
The evolution of net assets / (liabilities) on the balance sheet can be analyzed in the years ended 31 December 2021 and 2020 as
The evolution of net assets / (liabilities) on the balance sheet can be analysed in the years ended 31 December 2021 and 2020 as
(in thousands of Euros)
Post-employment benefits costs
Net interest
Early retirements
Post-employment benefits costs
follows:
follows:
At the beginning of the exercise
Cost for exercise
Contributions made in the exercise
At the beginning of the exercise
Undivided transfer and reduction of liabilities
Cost for exercise
Other
Contributions made in the exercise
Undivided transfer and reduction of liabilities
At the end of the exercise
Social Security and clause 98
Other
Actuarial gains / (losses) recognized in other comprehensive income
Social Security and clause 98
Actuarial gains / (losses) recognized in other comprehensive income
3 854
2 908
512
3 854
5 714
3 979
1 310
5 714
31.12.2021
31.12.2020
( 27 052)
( 153 073)
(in thousands of Euros)
( 3 854)
31.12.2021
( 75 329)
( 5 714)
31.12.2020
( 124 269)
( 27 052)
86 708
( 3 854)
-
37 187
( 75 329)
( 38 920)
86 708
-
( 21 260)
37 187
( 38 920)
( 153 073)
269 419
19 156
( 5 714)
-
( 124 269)
( 32 571)
269 419
19 156
( 27 052)
-
( 32 571)
In 2021, the value of early retirements amounted to Euro 39.1 million (31 December 2020: Euro 32.9 million), of which Euro 38.6
million are part of the Group's restructuring process (31 December 2020: Euro 31.6 million) and as such, they were recognized against
At the end of the exercise
( 21 260)
( 27 052)
the use of the provision for restructuring (see Note 34). These amounts are considered in Other in the previous table.
In 2021, the value of early retirements amounted to Euro 39.1 million (31 December 2020: Euro 32.9 million), of which Euro 38.6
million are part of the Group's restructuring process (31 December 2020: Euro 31.6 million) and as such, they were recognized against
the use of the provision for restructuring (see Note 34). These amounts are considered in Other in the previous table.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 51 -
- 52 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
As at 31 December 2021 and 2020, the sensitivity analysis to a 0.25% change in the assumptions rate used and one year in the
As at 31 December 2021 and 2020, the sensitivity analysis to a 0.25% change in the assumptions rate used and one year in the
mortality table results in the following changes in the current value of liabilities determined for past services:
mortality table results in the following changes in the current value of liabilities determined for past services:
Assumptions
Assumptions
Discount rate
Discount rate
Salary increase rate
Salary increase rate
Pension increase rate
Pension increase rate
Mortality table
Mortality table
(in thousands of Euros)
(in thousands of Euros)
Change in the amount of liabilities due to the change:
Change in the amount of liabilities due to the change:
31.12.2021
31.12.2021
31.12.2020
31.12.2020
of +0.25% in the
of +0.25% in the
rate used
rate used
of -0.25% in the
of -0.25% in the
rate used
rate used
of +0.25% in the
of +0.25% in the
rate used
rate used
of -0.25% in the
of -0.25% in the
rate used
rate used
( 73 171)
( 73 171)
13 507
13 507
68 855
68 855
77 795
77 795
( 13 009)
( 13 009)
( 64 469)
( 64 469)
( 73 282)
( 73 282)
26 643
26 643
57 714
57 714
78 127
78 127
( 16 935)
( 16 935)
( 52 943)
( 52 943)
in +1 year
in +1 year
in -1 year
in -1 year
in +1 year
in +1 year
in -1 year
in -1 year
( 68 096)
( 68 096)
68 413
68 413
( 70 811)
( 70 811)
71 808
71 808
The evolution of actuarial deviations on the balance sheet can be analysed as follows:
The evolution of actuarial deviations on the balance sheet can be analysed as follows:
Accumulated actuarial losses recognized in other comprehensive income at the beginning of the exercise
Accumulated actuarial losses recognized in other comprehensive income at the beginning of the exercise
Actuarial (gains) / losses in the exercise:
Actuarial (gains) / losses in the exercise:
- Changes in assumptions
- Changes in assumptions
- Financial assumptions
- Financial assumptions
- Plan assets return (excluding net of interests)
- Plan assets return (excluding net of interests)
Other
Other
Accumulated actuarial losses recognized in other comprehensive income at the end of the exercise
Accumulated actuarial losses recognized in other comprehensive income at the end of the exercise
(in thousands of Euros)
(in thousands of Euros)
31.12.2021
31.12.2021
31.12.2020
31.12.2020
723 723
723 723
599 454
599 454
10 612
10 612
62 674
62 674
2 043
2 043
799 052
799 052
101 787
101 787
23 225
23 225
( 743)
( 743)
723 723
723 723
The costs of retirement pensions and health benefits for the years ended 31 December 2021 and 2020
can be analyzed as follows:
The costs of retirement pensions and health benefits for the years ended 31 December 2021 and 2020 can be analysed as follows:
The costs of retirement pensions and health benefits for the years ended 31 December 2021 and 2020 can be analysed as follows:
(in thousand of Euros)
(in thousand of Euros)
31.12.2020
31.12.2020
31.12.2021
31.12.2021
Current service cost
Current service cost
Net interest
Net interest
Early retirements
Early retirements
Post-employment benefits costs
Post-employment benefits costs
434
434
2 908
2 908
512
512
3 854
3 854
425
425
3 979
3 979
1 310
1 310
5 714
5 714
The evolution of net assets / (liabilities) on the balance sheet can be analyzed in the years ended 31
December 2021 and 2020 as follows:
The evolution of net assets / (liabilities) on the balance sheet can be analysed in the years ended 31 December 2021 and 2020 as
The evolution of net assets / (liabilities) on the balance sheet can be analysed in the years ended 31 December 2021 and 2020 as
follows:
follows:
At the beginning of the exercise
At the beginning of the exercise
Cost for exercise
Cost for exercise
Actuarial gains / (losses) recognized in other comprehensive income
Actuarial gains / (losses) recognized in other comprehensive income
Contributions made in the exercise
Contributions made in the exercise
Undivided transfer and reduction of liabilities
Undivided transfer and reduction of liabilities
Social Security and clause 98
Social Security and clause 98
Other
Other
At the end of the exercise
At the end of the exercise
(in thousands of Euros)
(in thousands of Euros)
31.12.2021
31.12.2021
31.12.2020
31.12.2020
( 27 052)
( 27 052)
( 3 854)
( 3 854)
( 75 329)
( 75 329)
86 708
86 708
-
-
37 187
37 187
( 38 920)
( 38 920)
( 21 260)
( 21 260)
( 153 073)
( 153 073)
( 5 714)
( 5 714)
( 124 269)
( 124 269)
269 419
269 419
19 156
19 156
-
-
( 32 571)
( 32 571)
( 27 052)
( 27 052)
In 2021, the value of early retirements amounted to Euro 39.1 million (31 December 2020: Euro 32.9 million), of which Euro 38.6
In 2021, the value of early retirements amounted to Euro 39.1 million (31 December 2020: Euro 32.9 million), of which Euro 38.6
million are part of the Group's restructuring process (31 December 2020: Euro 31.6 million) and as such, they were recognized against
million are part of the Group's restructuring process (31 December 2020: Euro 31.6 million) and as such, they were recognized against
the use of the provision for restructuring (see Note 34). These amounts are considered in Other in the previous table.
the use of the provision for restructuring (see Note 34). These amounts are considered in Other in the previous table.
In 2021, the value of early retirements amounted to Euro 39.1 million (31 December 2020: Euro 32.9
million), of which Euro 38.6 million are part of the Group’s restructuring process (31 December 2020:
Euro 31.6 million) and as such, they were recognized against the use of the provision for restructuring
(see Note 34). These amounts are considered in Other in the previous table.
The summary of the last five years of the fund’s liabilities and the funds balances, as well as experience
gains and losses, is analyzed as follows:
The summary of the last five years of the fund’s liabilities and the funds balances, as well as experience gains and losses, is analysed
as follows:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31.12.2021
31.12.2020
31.12.2019
31.12.2018
(in thousands of Euros)
- 52 -
31.12.2017
- 52 -
Retirement pension liabilities
Funds balance
(1 929 188)
(1 934 668)
(1 848 930)
(1 675 608)
(1 663 489)
1 907 928
1 907 616
1 695 857
1 648 168
1 648 405
(Under) / overfunding of liabilities
( 21 260)
( 27 052)
( 153 073)
( 27 440)
( 15 084)
(Gains) / losses on experience adjustments in retirement pension liabilities
(Gains) / losses on experience adjustments in plan assets
46 984
15 690
50 737
64 098
( 27 512)
( 82 287)
17 839
53 917
15 263
( 91 900)
The average duration of defined benefit plan liabilities is approximately 16 years (31 December 2020: approximately 16 years).
The average duration of defined benefit plan liabilities is approximately 16 years (31 December 2020:
approximately 16 years).
Career bonuses
As at 31 December 2021, the liabilities assumed by the Group amounted to Euro 7,467 thousand, corresponding to the liabilities for
past services subjacent to the career bonuses, as described in Note 7.27 – Employee benefits (31 December 2020: Euro 7 591
thousand) (see Note 33).
As at 31 December 2021, the costs recognized with career bonuses were Euro 539 thousand (31 December 2020: Euro 951
thousand) (see Note 17).
NOTE 18 – OTHER ADMINISTRATIVE EXPENSES
The breakdown of this caption is as follows:
Rentals
Advertising
Communication
Maintenance and repairs expenses
Travelling and representation
Transportation of valuables
Insurance
IT services
Independent work
Temporary work
Electronic payment systems
Legal costs
Consultancy and audit fees
Water, energy and fuel
Consumables
Other costs
Statutory audit of annual accounts
Other reliability assurance services
Total value of billable services
The caption Other costs includes, amongst others, specialised service costs incurred with security and surveillance, information
services, training and sundry external supplies.
As at 31 December 2021, rental costs includes an amount of Euro 582 thousand related to short-term operating lease contracts (31
December 2020: Euro 196 thousand), as described in note 7.24.
The fees invoiced during the years 2021 and 2020 by the Statutory Audit Firm, according to that laid down in article 508-F of the
Portuguese Companies Code (Código das Sociedades Comerciais), have the following:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 53 -
(in thousands of Euros)
31.12.2021
31.12.2020
3 886
6 345
10 954
8 311
1 531
3 323
5 362
39 381
1 735
915
11 023
3 533
22 284
2 988
1 409
18 118
2 800
6 739
12 113
8 766
1 386
4 584
3 123
45 610
2 569
1 322
11 625
4 938
24 688
3 185
1 487
18 228
141 098
153 163
(in thousands of Euros)
31.12.2021
31.12.2020
1 962
1 392
3 354
2 307
802
3 109
209
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The summary of the last five years of the fund’s liabilities and the funds balances, as well as experience gains and losses, is analyzed
as follows:
(in thousands of Euros)
The summary of the last five years of the fund’s liabilities and the funds balances, as well as experience gains and losses, is analyzed
as follows:
Retirement pension liabilities
(1 663 489)
(1 929 188)
(1 848 930)
(1 934 668)
(1 675 608)
31.12.2021
31.12.2020
31.12.2019
31.12.2018
31.12.2017
(in thousands of Euros)
Funds balance
(Under) / overfunding of liabilities
Retirement pension liabilities
1 907 928
31.12.2021
1 907 616
31.12.2020
1 695 857
31.12.2019
1 648 168
31.12.2018
1 648 405
31.12.2017
( 21 260)
(1 929 188)
( 27 052)
(1 934 668)
( 153 073)
(1 848 930)
( 27 440)
(1 675 608)
( 15 084)
(1 663 489)
Funds balance
(Gains) / losses on experience adjustments in retirement pension liabilities
1 907 928
46 984
1 907 616
50 737
1 695 857
64 098
1 648 168
17 839
1 648 405
15 263
(Under) / overfunding of liabilities
(Gains) / losses on experience adjustments in plan assets
( 21 260)
15 690
( 27 052)
( 27 512)
( 153 073)
( 82 287)
( 27 440)
53 917
( 15 084)
( 91 900)
Career bonuses
As at 31 December 2021, the liabilities assumed by the Group amounted to Euro 7,467 thousand,
corresponding to the liabilities for past services subjacent to the career bonuses, as described in Note
7.27 – Employee benefits (31 December 2020: Euro 7 591 thousand) (see Note 33).
(Gains) / losses on experience adjustments in retirement pension liabilities
The average duration of defined benefit plan liabilities is approximately 16 years (31 December 2020: approximately 16 years).
(Gains) / losses on experience adjustments in plan assets
( 82 287)
( 27 512)
46 984
53 917
50 737
17 839
64 098
15 690
( 91 900)
15 263
As at 31 December 2021, the costs recognized with career bonuses were Euro 539 thousand (31
December 2020: Euro 951 thousand) (see Note 17).
Career bonuses
As at 31 December 2021, the liabilities assumed by the Group amounted to Euro 7,467 thousand, corresponding to the liabilities for
The average duration of defined benefit plan liabilities is approximately 16 years (31 December 2020: approximately 16 years).
past services subjacent to the career bonuses, as described in Note 7.27 – Employee benefits (31 December 2020: Euro 7 591
thousand) (see Note 33).
Career bonuses
As at 31 December 2021, the liabilities assumed by the Group amounted to Euro 7,467 thousand, corresponding to the liabilities for
As at 31 December 2021, the costs recognized with career bonuses were Euro 539 thousand (31 December 2020: Euro 951
past services subjacent to the career bonuses, as described in Note 7.27 – Employee benefits (31 December 2020: Euro 7 591
thousand) (see Note 17).
thousand) (see Note 33).
NOTE 18 – OTHER ADMINISTRATIVE EXPENSES
As at 31 December 2021, the costs recognized with career bonuses were Euro 539 thousand (31 December 2020: Euro 951
NOTE 18 – OTHER ADMINISTRATIVE EXPENSES
thousand) (see Note 17).
The breakdown of this caption is as follows:
The breakdown of this caption is as follows:
NOTE 18 – OTHER ADMINISTRATIVE EXPENSES
The breakdown of this caption is as follows:
(in thousands of Euros)
31.12.2021
31.12.2020
Rentals
Advertising
Communication
Maintenance and repairs expenses
Rentals
Travelling and representation
Advertising
Transportation of valuables
Communication
Insurance
Maintenance and repairs expenses
IT services
Travelling and representation
Independent work
Transportation of valuables
Temporary work
Insurance
Electronic payment systems
IT services
Legal costs
Independent work
Consultancy and audit fees
Temporary work
Water, energy and fuel
Electronic payment systems
Consumables
Legal costs
Other costs
Consultancy and audit fees
Water, energy and fuel
Consumables
Other costs
(in thousands of Euros)
31.12.2021
31.12.2020
3 886
6 345
10 954
8 311
3 886
1 531
6 345
3 323
10 954
5 362
8 311
39 381
1 531
1 735
3 323
915
5 362
11 023
39 381
3 533
1 735
22 284
915
2 988
11 023
1 409
3 533
18 118
22 284
2 988
141 098
1 409
18 118
2 800
6 739
12 113
8 766
2 800
1 386
6 739
4 584
12 113
3 123
8 766
45 610
1 386
2 569
4 584
1 322
3 123
11 625
45 610
4 938
2 569
24 688
1 322
3 185
11 625
1 487
4 938
18 228
24 688
3 185
153 163
1 487
18 228
The caption Other costs includes, amongst others, specialised service costs incurred with security and surveillance, information
services, training and sundry external supplies.
153 163
141 098
The caption Other costs includes, amongst others, specialised service costs incurred with security and
surveillance, information services, training and sundry external supplies.
As at 31 December 2021, rental costs includes an amount of Euro 582 thousand related to short-term operating lease contracts (31
The caption Other costs includes, amongst others, specialised service costs incurred with security and surveillance, information
December 2020: Euro 196 thousand), as described in note 7.24.
services, training and sundry external supplies.
As at 31 December 2021, rental costs includes an amount of Euro 582 thousand related to short-term
operating lease contracts (31 December 2020: Euro 196 thousand), as described in note 7.24.
The fees invoiced during the years 2021 and 2020 by the Statutory Audit Firm, according to that laid down in article 508-F of the
As at 31 December 2021, rental costs includes an amount of Euro 582 thousand related to short-term operating lease contracts (31
Portuguese Companies Code (Código das Sociedades Comerciais), have the following:
December 2020: Euro 196 thousand), as described in note 7.24.
The fees invoiced during the years 2021 and 2020 by the Statutory Audit Firm, according to that laid
down in article 508-F of the Portuguese Companies Code (Código das Sociedades Comerciais), have
the following:
(in thousands of Euros)
The fees invoiced during the years 2021 and 2020 by the Statutory Audit Firm, according to that laid down in article 508-F of the
Portuguese Companies Code (Código das Sociedades Comerciais), have the following:
31.12.2020
31.12.2021
Statutory audit of annual accounts
Other reliability assurance services
Total value of billable services
Statutory audit of annual accounts
Other reliability assurance services
Total value of billable services
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 962
1 392
2 307
802
(in thousands of Euros)
31.12.2021
3 354
31.12.2020
3 109
1 962
1 392
3 354
2 307
802
3 109
- 52 -
- 52 -
210
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 19 – CONTRIBUTIONS TO RESOLUTION
FUNDS AND DEPOSIT GUARANTEE SCHEMES
NOTE 19 – CONTRIBUTIONS TO RESOLUTION FUNDS AND DEPOSIT GUARANTEE SCHEMES
NOTE 19 – CONTRIBUTIONS TO RESOLUTION FUNDS AND DEPOSIT GUARANTEE SCHEMES
This caption on 31 December 2021 and 2020 is analyzed as follows:
This caption on 31 December 2021 and 2020 is analysed as follows:
This caption on 31 December 2021 and 2020 is analysed as follows:
Contribution to the Fundo Único de Resolução
Contribution to the Fundo de Resolução Nacional
Contribution to the Fundo de Garantia de Depósitos
Contribution to the Fundo Único de Resolução
Contribution to the Fundo de Resolução Nacional
Contribution to the Fundo de Garantia de Depósitos
31.12.2021
31.12.2021
25 341
15 150
44
25 341
15 150
44
40 535
40 535
NOTE 20 – IMPAIRMENT
NOTE 20 – IMPAIRMENT
NOTE 20 – IMPAIRMENT
(In thousands of Euros)
(In thousands of Euros)
31.12.2020
31.12.2020
22 266
12 743
39
22 266
12 743
39
35 048
35 048
Provisions or reversal of provisions (see Note 34)
Provisions or reversal of provisions (see Note 34)
Provisions for guarantees
Provisions for commitments
Other provisions
Provisions for guarantees
Provisions for commitments
Other provisions
Impairment or reversal of impairment on financial assets not measured at fair value through profit
or loss (see Note 24)
Impairment or reversal of impairment on financial assets not measured at fair value through profit
or loss (see Note 24)
Securities at fair value through equity
Securities at amortised cost
Loans and advances to banks
Loans and advances to customers
Securities at fair value through equity
Securities at amortised cost
Loans and advances to banks
Loans and advances to customers
Charges
Charges
31.12.2021
31.12.2021
Reversals
Reversals
Total
Total
Charges
Charges
(in thousands of Euros)
(in thousands of Euros)
31.12.2020
31.12.2020
Reversals
Reversals
Total
Total
18 764
18 764
10 768
10 768
159 400
159 400
188 932
188 932
( 31 517)
( 31 517)
( 7 855)
( 7 855)
( 21 725)
( 21 725)
( 61 097)
( 61 097)
( 12 753)
( 12 753)
2 913
2 913
137 675
137 675
127 835
127 835
44 897
44 897
12 189
12 189
213 441
213 441
270 527
270 527
( 29 457)
( 29 457)
( 5 513)
( 5 513)
( 49 134)
( 49 134)
( 84 104)
( 84 104)
15 440
15 440
6 676
6 676
164 307
164 307
186 423
186 423
1 302
1 302
1 215 760
1 215 760
135 814
135 814
301 426
301 426
1 654 302
1 654 302
( 928)
( 928)
( 1 168 355)
( 1 168 355)
( 134 065)
( 134 065)
( 152 051)
( 152 051)
( 1 455 399)
( 1 455 399)
374
374
47 405
47 405
1 749
1 749
149 375
149 375
198 903
198 903
3 554
3 554
738 568
738 568
320 533
320 533
808 179
808 179
1 870 834
1 870 834
( 5 080)
( 5 080)
( 696 043)
( 696 043)
( 130 904)
( 130 904)
( 283 737)
( 283 737)
( 1 115 764)
( 1 115 764)
( 1 526)
( 1 526)
42 525
42 525
189 629
189 629
524 442
524 442
755 070
755 070
Impairment or reversal of impairment of investment in subsidiaries, joint ventures and associates
(see Note 26)
Impairment or reversal of impairment of investment in subsidiaries, joint ventures and associates
(see Note 26)
678
678
( 993)
( 993)
( 315)
( 315)
5 142
5 142
( 950)
( 950)
4 192
4 192
Impairment or reversal of impairment on non-financial assets
Impairment or reversal of impairment on non-financial assets
Non-current assets and disposal groups classified as held for sale (see Note 32)
Tangible fixed assets (see Note 27)
Intangible fixed assets (see Note 29)
Other assets (see Note 31)
Non-current assets and disposal groups classified as held for sale (see Note 32)
Tangible fixed assets (see Note 27)
Intangible fixed assets (see Note 29)
Other assets (see Note 31)
NOTE 21 – EARNINGS PER SHARE
NOTE 21 – EARNINGS PER SHARE
10 182
3 484
-
34 694
48 360
10 182
3 484
-
34 694
48 360
( 520)
( 520)
( 5 167)
( 5 167)
-
-
( 16 359)
( 16 359)
( 22 046)
( 22 046)
9 662
9 662
( 1 683)
( 1 683)
-
-
18 335
18 335
26 314
26 314
177 769
177 769
3 334
3 334
-
-
78 613
78 613
259 716
259 716
-
-
-
( 13 938)
( 13 938)
-
-
-
( 13 938)
( 13 938)
177 769
177 769
3 334
3 334
-
-
64 675
64 675
245 778
245 778
1 892 272
1 892 272
( 1 539 535)
( 1 539 535)
352 737
352 737
2 406 219
2 406 219
( 1 214 756)
( 1 214 756)
1 191 463
1 191 463
NOTE 21 – EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share
The basic earnings per share are calculated dividing the net profit attributable to the shareholders of the Bank by the weighted average
The basic earnings per share are calculated dividing the net profit attributable to the shareholders of the Bank by the weighted average
number of ordinary shares in circulation during the financial year.
number of ordinary shares in circulation during the financial year.
Basic earnings per share
The basic earnings per share are calculated dividing the net profit attributable to the shareholders of
the Bank by the weighted average number of ordinary shares in circulation during the financial year.
Net consolidated profit / (loss) attributable to shareholder of the Bank
Net consolidated profit / (loss) attributable to shareholder of the Bank
(In thousands of Euros)
(In thousands of Euros)
31.12.2021
31.12.2021
31.12.2020
31.12.2020
184 504
184 504
(1 329 317)
(1 329 317)
9 800 000
9 800 000
9 800 000
9 800 000
0.02
0.02
0.02
0.02
(0.14)
(0.14)
(0.13)
(0.13)
Weighted average number of common shares outstanding (thousands)
Weighted average number of common shares outstanding (thousands)
Basic earnings per share attributable to shareholders of NOVO BANCO (in Euros)
Basic earnings per share attributable to shareholders of NOVO BANCO (in Euros)
Basic earnings per share from continuing activities attributable to shareholders of NOVO BANCO (in Euros)
Basic earnings per share from continuing activities attributable to shareholders of NOVO BANCO (in Euros)
Diluted earnings per share
Diluted earnings per share
The diluted earnings per share are calculated considering the net profit attributable to the shareholders of the Bank and the weighted
The diluted earnings per share are calculated considering the net profit attributable to the shareholders of the Bank and the weighted
average number of ordinary shares in circulation, adjusted for the effects of all potential dilutive ordinary shares.
average number of ordinary shares in circulation, adjusted for the effects of all potential dilutive ordinary shares.
The diluted earnings per share do not differ from the basic earnings per share, since there are no dilutive effects .
The diluted earnings per share do not differ from the basic earnings per share, since there are no dilutive effects .
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 54 -
- 54 -
211
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 19 – CONTRIBUTIONS TO RESOLUTION FUNDS AND DEPOSIT GUARANTEE SCHEMES
This caption on 31 December 2021 and 2020 is analyzed as follows:
Contribution to the Resolution Fund
Contribution to the National Resolution Fund
Contribution to the Deposit Guarantee Fund
NOTE 20 – IMPAIRMENT
Provisions or reversal of provisions (see Note 34)
Provisions for guarantees
Provisions for commitments
Other provisions
or loss (see Note 24)
Securities at fair value through equity
Securities at amortised cost
Loans and advances to banks
Loans and advances to customers
Impairment or reversal of impairment on non-financial assets
Non-current assets and disposal groups classified as held for sale
Tangible fixed assets (see Note 29)
Intangible fixed assets (see Note 31)
Other assets (see Note 32)
NOTE 21 – EARNINGS PER SHARE
Impairment or reversal of impairment on financial assets not measured at fair value through profit
(in thousands of Euros)
31.12.2021
31.12.2020
25 276
14 854
42
40 172
22 201
12 528
37
34 766
31.12.2021
31.12.2020
Charges
Reversals
Total
Charges
Reversals
Total
(in thousands of Euros)
18 764
10 768
159 400
188 932
( 31 517)
( 7 855)
( 21 725)
( 61 097)
1 302
1 215 760
135 814
301 426
1 654 302
( 928)
( 1 168 355)
( 134 065)
( 152 051)
( 1 455 399)
( 12 753)
2 913
137 675
127 835
374
47 405
1 749
149 375
198 903
44 897
12 189
213 441
270 527
3 554
738 568
320 533
808 179
( 29 457)
( 5 513)
( 49 134)
( 84 104)
( 5 080)
( 696 043)
( 130 904)
( 283 737)
1 870 834
( 1 115 764)
15 440
6 676
164 307
186 423
( 1 526)
42 525
189 629
524 442
755 070
10 182
3 484
-
34 694
48 360
( 520)
( 5 167)
-
( 16 359)
( 22 046)
9 662
( 1 683)
-
18 335
26 314
177 769
3 334
-
78 613
259 716
-
-
-
( 13 938)
( 13 938)
177 769
3 334
-
64 675
245 778
1 892 272
( 1 539 535)
352 737
2 406 219
( 1 214 756)
1 191 463
Impairment or reversal of impairment of investment in subsidiaries, joint ventures and associates
(see Note 26)
678
( 993)
( 315)
5 142
( 950)
4 192
Basic earnings per share
The basic earnings per share are calculated dividing the net profit attributable to the shareholders of the Bank by the weighted average
number of ordinary shares in circulation during the financial year.
Net consolidated profit / (loss) attributable to shareholder of the Bank
Weighted average number of common shares outstanding (thousands)
Basic earnings per share attributable to shareholders of NOVO BANCO (in Euros)
Basic earnings per share from continuing activities attributable to shareholders of NOVO BANCO (in Euros)
(In thousands of Euros)
31.12.2021
31.12.2020
184 504
(1 329 317)
9 800 000
9 800 000
0.02
0.02
(0.14)
(0.13)
Diluted earnings per share
The diluted earnings per share are calculated considering the net profit attributable to the shareholders of the Bank and the weighted
average number of ordinary shares in circulation, adjusted for the effects of all potential dilutive ordinary shares.
Diluted earnings per share
The diluted earnings per share are calculated considering the net profit attributable to the shareholders
of the Bank and the weighted average number of ordinary shares in circulation, adjusted for the effects
of all potential dilutive ordinary shares.
The diluted earnings per share do not differ from the basic earnings per share, since there are no dilutive effects.
The diluted earnings per share do not differ from the basic earnings per share, since there are no dilutive
effects.
NOTE 22 – CASH, CASH BALANCES AT CENTRAL
BANKS AND OTHER DEMAND DEPOSITS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 22 – CASH, CASH BALANCES AT CENTRAL BANKS AND OTHER DEMAND DEPOSITS
As at 31 December 2021 and 31 December 2020, this caption is analysed as follows:
As at 31 December 2021 and 31 December 2020, this caption is analysed as follows:
Cash
Demand deposits with Central Banks
Bank of Portugal
Other Central Banks
Deposits in other domestic credit institutions
Repayable on demand
Uncollected checks
Deposits with banks abroad
Repayable on demand
Other deposits
- 53 -
(in thousands of Euros)
31.12.2021
31.12.2020
151 699
149 205
5 261 912
2 717
2 289 339
3 458
5 264 629
2 292 797
85 433
163 138
248 571
19 565
51 590
71 155
162 632
44 007
143 614
38 688
206 639
182 302
5 871 538
2 695 459
The caption Demand Deposits with Bank of Portugal includes mandatory deposits to comply with the minimum legal cash reserve
requirements in an amount of Euro 264.3 million (31 December 2020: Euro 262.2 million), which aim to satisfy the legal requirements
regarding the constitution of minimum cash balances. According to the European Central Bank Regulation (EU) No. 1358/2011, of
14 December 2011, minimum cash requirements of demand deposits with Bank of Portugal are interest-bearing and correspond to
1% of the deposits and debt certificates maturing in less than 2 years, after excluding from these the deposits of institutions subject
to the European System of Central Banks minimum reserve requirements. As at 31 December 2021 and 2020, the average interest
rate on these deposits was null.
Compliance with minimum cash requirements, for a given observation period, is monitored taking into account the average amount
of the deposits with Bank of Portugal over said period. The balance of the account with Bank of Portugal as at 31 December 2021
was included in the observation period running from 22 December 2021 to 08 February 20202.
Checks to be collected on credit institutions at home and abroad were sent for collection within the first business days following the
reference dates.
212
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 54 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The caption Demand Deposits with Bank of Portugal includes mandatory deposits to comply with the
minimum legal cash reserve requirements in an amount of Euro 264.3 million (31 December 2020: Euro
262.2 million), which aim to satisfy the legal requirements regarding the constitution of minimum cash
balances. According to the European Central Bank Regulation (EU) No. 1358/2011, of 14 December
2011, minimum cash requirements of demand deposits with Bank of Portugal are interest-bearing and
correspond to 1% of the deposits and debt certificates maturing in less than 2 years, after excluding
from these the deposits of institutions subject to the European System of Central Banks minimum
reserve requirements. As at 31 December 2021 and 2020, the average interest rate on these deposits
was null.
Compliance with minimum cash requirements, for a given observation period, is monitored taking into
account the average amount of the deposits with Bank of Portugal over said period. The balance of the
account with Bank of Portugal as at 31 December 2021 was included in the observation period running
from 22 December 2021 to 08 February 2022.
Checks to be collected on credit institutions at home and abroad were sent for collection within the
first business days following the reference dates.
NOTE 23 – FINANCIAL ASSETS AND LIABILITIES
HELD FOR TRADING
As at 31 December 2021 and 2020, this caption is analysed as follows:
NOTE 23 – FINANCIAL ASSETS AND LIABILITIES HELD FOR TRADING
NOTE 23 – FINANCIAL ASSETS AND LIABILITIES HELD FOR TRADING
As at 31 December 2021 and 2020, this caption is analysed as follows:
As at 31 December 2021 and 2020, this caption is analysed as follows:
Financial assets held for trading
Financial assets held for trading
Securities
Securities
Bonds and other fixed income securities
Bonds and other fixed income securities
Issued by government and public entities
Issued by government and public entities
Derivatives
Derivatives
Derivatives held for trading with positive fair value
Derivatives held for trading with positive fair value
Financial liabilities held for trading
Financial liabilities held for trading
Derivatives
Derivatives
Derivatives held for trading with negative fair value
Derivatives held for trading with negative fair value
31.12.2021
31.12.2021
(in thousands of Euros)
(in thousands of Euros)
31.12.2020
31.12.2020
114 465
114 465
114 465
114 465
263 199
263 199
263 199
263 199
377 664
377 664
306 054
306 054
306 054
306 054
267 016
267 016
267 016
267 016
388 257
388 257
388 257
388 257
655 273
655 273
554 791
554 791
554 791
554 791
Securities held for trading
In accordance with the accounting policy described in Note 7.10.5, securities held for trading are those
acquired to be traded in the short-term regardless of their maturity.
Securities held for trading
Securities held for trading
In accordance with the accounting policy described in Note 7.10.5, securities held for trading are those acquired to be traded in the
In accordance with the accounting policy described in Note 7.10.5, securities held for trading are those acquired to be traded in the
short-term regardless of their maturity.
short-term regardless of their maturity.
As of 31 December 2021, and 2020, the schedule of securities held for trading by maturity is as follows:
As of 31 December 2021, and 2020, the schedule of securities held for trading by maturity is as follows:
As of 31 December 2021, and 2020, the schedule of securities held for trading by maturity is as follows:
1 to 5 years
1 to 5 years
More than 5 years
More than 5 years
A breakdown of the securities held for trading, by fair value hierarchy, is presented in Note 42.
A breakdown of the securities held for trading, by fair value hierarchy, is presented in Note 42.
31.12.2021
31.12.2021
(in thousands of Euros)
(in thousands of Euros)
31.12.2020
31.12.2020
-
-
114 465
114 465
114 465
114 465
3 734
3 734
263 282
263 282
267 016
267 016
213
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 55 -
- 55 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
A breakdown of the securities held for trading, by fair value hierarchy, is presented in Note 42.
Derivatives
Derivatives
As at 31 December 2021 and 31 December 2020, this caption is analysed as follows:
As at 31 December 2021 and 31 December 2020, this caption is analysed as follows:
Trading derivatives
Exchange rate contracts
Forward
- buy
- sell
Currency Swaps
- buy
- sell
Currency Interest Rate Swaps
- buy
- sell
Currency Options
- buy
- sell
Interest rate contracts
Interest Rate Swaps
- buy
- sell
Swaption - Interest Rate Options
- buy
- sell
Equity / Index contracts
Equity / Index Swaps
- buy
- sell
Equity / Index Options
- buy
- sell
Credit default contracts
Credit Default Swaps
- buy
- sell
Commodities Contracts
Commodities Swaps
- buy
- sell
Notional
31.12.2021
Fair Value
Assets
Liabilities
Notional
(in thousands of Euros)
31.12.2020
Fair Value
Assets
Liabilities
587 774
591 858
451 112
452 353
21 083
21 083
304 349
304 349
5 988 949
5 988 949
86 436
166 554
-
-
526 502
526 498
-
-
29 633
29 633
2 704
7 107
633
1 934
20 024
20 103
5 766
5 766
622 307
605 890
967 872
968 543
21 390
21 390
168 095
167 870
23 668
7 956
1 431
5 468
21 363
21 363
10 743
10 706
29 127
34 910
57 205
45 493
224 317
265 143
869
2 819
7 138 184
7 139 186
89 767
165 221
318 578
499 782
1 084
3 961
225 186
267 962
319 662
503 743
-
-
8 190
8 190
-
-
696
696
2 608
2 608
-
-
574
574
30 467
30 467
663 491
685 480
2 399
2 399
-
-
2 337
2 204
9 053
11 390
3 335
5 539
-
-
-
-
16
16
-
-
263 199
306 054
388 257
554 791
Fair value option derivatives include instruments designed to manage the risk associated with certain financial assets and liabilities
designated at fair value through profit or loss, in accordance with the accounting policy described in Notes 7.10.6 and 7.10.7, and
which the Group has not designated for hedge accounting.
Fair value option derivatives include instruments designed to manage the risk associated with certain
financial assets and liabilities designated at fair value through profit or loss, in accordance with the
accounting policy described in Notes 7.10.6 and 7.10.7, and which the Group has not designated for
hedge accounting.
In the financial year of 2021, the Group recognized a loss of Euro 454 thousand related to the CVA of derivative instruments (31
December 2020: loss of Euro 291 thousand). The way of determining the CVA is explained in Note 42.
In the financial year of 2021, the Group recognized a loss of Euro 454 thousand related to the CVA of
derivative instruments (31 December 2020: loss of Euro 291 thousand). The way of determining the
CVA is explained in Note 42.
As at 31 December 2021 and 2020, the analysis of the derivatives held for trading by maturity period is as follows:
As at 31 December 2021 and 2020, the analysis of the derivatives held for trading by maturity period
is as follows:
Trading Derivatives
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
31.12.2021
Notional
Assets
Liabilities
Fair Value (net)
31.12.2020
Notional
Assets
Liabilities
(in thousands of Euros)
Fair Value (net)
1 137 915
654 256
1 633 635
4 570 032
7 995 838
1 142 432
654 868
1 640 297
4 643 680
8 081 277
( 6 380)
5 224
2 778
( 44 477)
( 42 855)
1 597 161
822 432
2 329 447
4 954 932
9 703 972
1 597 477
805 003
2 349 045
5 034 921
9 786 446
( 81)
8 725
( 23 606)
( 151 572)
( 166 534)
214
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 56 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Derivatives
As at 31 December 2021 and 31 December 2020, this caption is analysed as follows:
Trading derivatives
Exchange rate contracts
Forward
Currency Swaps
Currency Interest Rate Swaps
Currency Options
Interest rate contracts
Interest Rate Swaps
Swaption - Interest Rate Options
Equity / Index contracts
Equity / Index Swaps
Equity / Index Options
Credit default contracts
Credit Default Swaps
Commodities Contracts
Commodities Swaps
- buy
- sell
- buy
- sell
- buy
- sell
- buy
- sell
- buy
- sell
- buy
- sell
- buy
- sell
- buy
- sell
- buy
- sell
- buy
- sell
31.12.2021
Fair Value
(in thousands of Euros)
31.12.2020
Fair Value
Notional
Notional
Assets
Liabilities
Assets
Liabilities
587 774
591 858
451 112
452 353
21 083
21 083
304 349
304 349
5 988 949
5 988 949
86 436
166 554
526 502
526 498
-
-
-
-
29 633
29 633
2 704
7 107
23 668
7 956
633
1 934
1 431
5 468
20 024
20 103
21 363
21 363
5 766
5 766
10 743
10 706
29 127
34 910
57 205
45 493
224 317
265 143
318 578
499 782
869
2 819
1 084
3 961
225 186
267 962
319 662
503 743
8 190
8 190
2 608
2 608
-
-
-
-
-
-
696
696
574
574
2 337
2 204
9 053
11 390
3 335
5 539
-
-
-
-
16
16
-
-
622 307
605 890
967 872
968 543
21 390
21 390
168 095
167 870
7 138 184
7 139 186
89 767
165 221
30 467
30 467
663 491
685 480
2 399
2 399
-
-
263 199
306 054
388 257
554 791
Fair value option derivatives include instruments designed to manage the risk associated with certain financial assets and liabilities
designated at fair value through profit or loss, in accordance with the accounting policy described in Notes 7.10.6 and 7.10.7, and
which the Group has not designated for hedge accounting.
In the financial year of 2021, the Group recognized a loss of Euro 454 thousand related to the CVA of derivative instruments (31
December 2020: loss of Euro 291 thousand). The way of determining the CVA is explained in Note 42.
As at 31 December 2021 and 2020, the analysis of the derivatives held for trading by maturity period is as follows:
Trading Derivatives
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
31.12.2021
Notional
Assets
Liabilities
Fair Value (net)
31.12.2020
Notional
Assets
Liabilities
(in thousands of Euros)
Fair Value (net)
1 137 915
654 256
1 633 635
4 570 032
7 995 838
1 142 432
654 868
1 640 297
4 643 680
8 081 277
( 6 380)
5 224
2 778
( 44 477)
( 42 855)
1 597 161
822 432
2 329 447
4 954 932
9 703 972
1 597 477
805 003
2 349 045
5 034 921
9 786 446
( 81)
8 725
( 23 606)
( 151 572)
( 166 534)
NOTE 24 – FINANCIAL ASSETS MANDATORILY AT FAIR VALUE THROUGH PROFIT OR LOSS, AT FAIR
VALUE THROUGH OTHER COMPREHENSIVE INCOME AND AT AMORTISED COST
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 56 -
As at 31 December 2021 and 2020, these captions are analysed as follows:
NOTE 24 – FINANCIAL ASSETS MANDATORILY AT FAIR VALUE THROUGH PROFIT OR LOSS, AT FAIR VALUE THROUGH
OTHER COMPREHENSIVE INCOME AND AT AMORTISED COST
As at 31 December 2021 and 2020, these captions are analysed as follows:
31.12.2021
(in thousands of Euros)
Mandatorily at fair
value through
profit and loss
Fair value
through other
comprehensive
income
Amortised cost
Fair value
changes *
Total
Securities
Loans and advances to banks
Loans and advances to customers
799 592
7 220 996
2 338 697
( 3 136)
10 356 149
-
-
-
-
50 466
23 650 739
-
50 466
33 797
23 684 536
799 592
7 220 996
26 039 902
30 661
34 091 151
* Fair value changes of the elements covered by the interest rate hedge portfolio (see Note 25)
31.12.2020
(in thousands of Euros)
Mandatorily at fair
value through
profit and loss
Fair value
through other
comprehensive
income
Amortised cost
Fair value
changes *
Total
Securities
Loans and advances to banks
Loans and advances to customers
960 962
7 907 587
-
-
-
-
2 229 947
113 795
23 554 304
1 129
-
62 730
11 099 625
113 795
23 617 034
960 962
7 907 587
25 898 046
63 859
34 830 454
* Fair value changes of the elements covered by the interest rate hedge portfolio (see Note 25)
215
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 57 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Securities
As at 31 December 2021 and 2020, the detail of securities portfolio is as follows:
As at 31 December 2021 and 2020, the detail of securities portfolio is as follows:
Securities
Securities mandatorily at fair value through profit or loss
Bonds and other fixed income securities
From other issuers
Shares
Other variable income securities
Securities at fair value through other comprehensive income
Bonds and other fixed income securities
From public issuers
From other issuers
Shares
Securities at amortised cost
Bonds and other fixed income securities
From public issuers
From other issuers
Impairment
Value adjustments for interest rate risk hedging (see Note 25)
(in thousands of Euros)
31.12.2021
31.12.2020
54 960
427 886
316 746
799 592
160 184
406 104
394 674
960 962
5 761 717
1 398 899
60 380
6 490 076
1 352 759
64 752
7 220 996
7 907 587
377 335
2 208 359
421 249
2 009 935
( 246 997)
( 201 237)
2 338 697
2 229 947
( 3 136)
1 129
10 356 149
11 099 625
Other variable income securities mandatorily accounted at fair value through profit or loss include the participation units held by the
Group in Restructuring Funds, which are accounted for in accordance with the accounting policy described in Note 7.10.4, based on
the net book value disclosed by the Management Companies, which may be adjusted according to information, analyzes or
independent evaluations deemed necessary to determine its fair value, in response to guidelines from the European Central Bank.
Other variable income securities mandatorily accounted at fair value through profit or loss include the
participation units held by the Group in Restructuring Funds, which are accounted for in accordance
with the accounting policy described in Note 7.10.4, based on the net book value disclosed by the
Management Companies, which may be adjusted according to information, analyzes or independent
evaluations deemed necessary to determine its fair value, in response to guidelines from the European
Central Bank.
By the end of 2020, novobanco completed the independent assessment of the restructuring funds. These funds are “level 3” assets
in accordance with the fair value hierarchy of IFRS 13 (quotations provided by third parties whose parameters used are not observable
in the market), and novobanco requested an independent evaluation from an international consulting company in articulation with
real estate consultancy companies. This work resulted in a market value of Euro 498.8 million for the total investment held in these
assets, which led to the recording of a loss of Euro -300.2 million in the year 2020 recorded under the heading of gains or losses with
financial assets mandatorily accounted for at fair value through profit or loss (see Note 13). This assessment included the
establishment of assumptions for the valuation of assets included in the funds, a discount at the level of the fund based on parameters
equivalent to quoted funds and an appreciation of the potential evolution of the fund. (see Note 42)
real estate consultancy companies. This work resulted in a market value of Euro 498.8 million for the
total investment held in these assets, which led to the recording of a loss of Euro -300.2 million in the
year 2020 recorded under the heading of gains or losses with financial assets mandatorily accounted
for at fair value through profit or loss (see Note 13). This assessment included the establishment of
assumptions for the valuation of assets included in the funds, a discount at the level of the fund based
on parameters equivalent to quoted funds and an appreciation of the potential evolution of the fund.
(see Note 42)
As at 31 December 2021 and 2020, the detail of the fair value securities through other comprehensive
income is as follows:
By the end of 2020, novobanco completed the independent assessment of the restructuring funds.
These funds are “level 3” assets in accordance with the fair value hierarchy of IFRS 13 (quotations
provided by third parties whose parameters used are not observable in the market), and novobanco
requested an independent evaluation from an international consulting company in articulation with
As at 31 December 2021 and 2020, the detail of the fair value securities through other comprehensive income is as follows:
Bonds and other fixed income securities
From public issuers
Residents
Non residents
From other issuers
Residents
Non residents
Shares
Residents
Non residents
Other securities with variable income
Residents
Cost (1)
Fair value reserve
Positive
Negative
Book value
Impairment
reserves
(in thousands of Euros)
5 560 962
2 478 402
3 082 560
1 374 554
29 609
1 344 945
442 843
344 174
98 669
3
3
205 567
87 103
118 464
30 008
63
29 945
15 963
14 633
1 330
-
-
( 4 812)
( 918)
( 3 894)
( 5 663)
( 2 335)
( 3 328)
( 398 426)
( 310 732)
( 87 694)
( 3)
( 3)
5 761 717
2 564 587
3 197 130
1 398 899
27 337
1 371 562
60 380
48 075
12 305
-
-
( 3 043)
( 1 511)
( 1 532)
( 673)
( 3)
( 670)
-
-
-
-
-
Balance as at 31 December 2021
7 378 362
251 538
( 408 904)
7 220 996
( 3 716)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 58 -
216
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Securities
As at 31 December 2021 and 2020, the detail of securities portfolio is as follows:
Securities mandatorily at fair value through profit or loss
Bonds and other fixed income securities
From other issuers
Shares
Other variable income securities
Securities at fair value through other comprehensive income
Bonds and other fixed income securities
From public issuers
From other issuers
Shares
Securities at amortised cost
Bonds and other fixed income securities
From public issuers
From other issuers
Impairment
Value adjustments for interest rate risk hedging (see Note 25)
(in thousands of Euros)
31.12.2021
31.12.2020
54 960
427 886
316 746
799 592
160 184
406 104
394 674
960 962
5 761 717
1 398 899
60 380
6 490 076
1 352 759
64 752
7 220 996
7 907 587
377 335
2 208 359
421 249
2 009 935
( 246 997)
( 201 237)
2 338 697
2 229 947
( 3 136)
1 129
10 356 149
11 099 625
Other variable income securities mandatorily accounted at fair value through profit or loss include the participation units held by the
Group in Restructuring Funds, which are accounted for in accordance with the accounting policy described in Note 7.10.4, based on
the net book value disclosed by the Management Companies, which may be adjusted according to information, analyzes or
independent evaluations deemed necessary to determine its fair value, in response to guidelines from the European Central Bank.
By the end of 2020, novobanco completed the independent assessment of the restructuring funds. These funds are “level 3” assets
in accordance with the fair value hierarchy of IFRS 13 (quotations provided by third parties whose parameters used are not observable
in the market), and novobanco requested an independent evaluation from an international consulting company in articulation with
real estate consultancy companies. This work resulted in a market value of Euro 498.8 million for the total investment held in these
assets, which led to the recording of a loss of Euro -300.2 million in the year 2020 recorded under the heading of gains or losses with
financial assets mandatorily accounted for at fair value through profit or loss (see Note 13). This assessment included the
establishment of assumptions for the valuation of assets included in the funds, a discount at the level of the fund based on parameters
equivalent to quoted funds and an appreciation of the potential evolution of the fund. (see Note 42)
As at 31 December 2021 and 2020, the detail of the fair value securities through other comprehensive income is as follows:
Bonds and other fixed income securities
From public issuers
Residents
Non residents
From other issuers
Residents
Non residents
Shares
Residents
Non residents
Other securities with variable income
Residents
Cost (1)
Fair value reserve
Positive
Negative
Book value
Impairment
reserves
(in thousands of Euros)
5 560 962
2 478 402
3 082 560
1 374 554
29 609
1 344 945
442 843
344 174
98 669
3
3
205 567
87 103
118 464
30 008
63
29 945
15 963
14 633
1 330
-
-
( 4 812)
( 918)
( 3 894)
( 5 663)
( 2 335)
( 3 328)
( 398 426)
( 310 732)
( 87 694)
( 3)
( 3)
5 761 717
2 564 587
3 197 130
1 398 899
27 337
1 371 562
60 380
48 075
12 305
-
-
( 3 043)
( 1 511)
( 1 532)
( 673)
( 3)
( 670)
-
-
-
-
-
Balance as at 31 December 2021
7 378 362
251 538
( 408 904)
7 220 996
( 3 716)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Bonds and other fixed income securities
From public issuers
Residents
Non residents
From other issuers
Residents
Non residents
Shares
Residents
Non residents
Other securities with variable income
Residents
Cost (1)
Fair value reserve
Positive
Negative
(in thousands of Euros)
- 58 -
Book value
Impairment
reserves
6 130 285
2 650 953
3 479 332
1 286 344
29 605
1 256 739
463 232
359 127
104 105
2
2
360 033
129 520
230 513
68 749
107
68 642
18 163
15 396
2 767
-
-
( 242)
-
( 242)
( 2 334)
( 2 334)
-
( 416 643)
( 319 824)
( 96 819)
( 2)
( 2)
6 490 076
2 780 473
3 709 603
1 352 759
27 378
1 325 381
64 752
54 699
10 053
-
-
( 3 125)
( 1 435)
( 1 690)
( 565)
( 3)
( 562)
-
-
-
-
-
Saldo a 31 de dezembro de 2020
(1) Aquisition cost referring to shares and other equity instruments and amortized cost for debt securities.
7 879 863
446 945
( 419 221)
7 907 587
( 3 690)
During the year 2021, the Group sold Euro 956.1 million of financial instruments classified at fair value
through other comprehensive income (31 December 2020: Euro 1,323.9 million), with a gain of Euro
14.4 million (31 December 2020: gain of Euro 82.4 million), recorded in the income statement, from
the sale of debt instruments and a loss of Euro 20.5 million that were transferred from revaluation
reserves to sales-related reserves (31 December 2020: loss of Euro 15.0 million), from the sale of equity
instruments.
During the year 2021, the Group sold Euro 956.1 million of financial instruments classified at fair value through other comprehensive
income (31 December 2020: Euro 1,323.9 million), with a gain of Euro 14.4 million (31 December 2020: gain of Euro 82.4 million),
recorded in the income statement, from the sale of debt instruments and a loss of Euro 20.5 million that were transferred from
revaluation reserves to sales-related reserves (31 December 2020: loss of Euro 15.0 million), from the sale of equity instruments.
The movements in the impairment reserves in fair value securities through other comprehensive
income are presented as follows:
The movements in the impairment reserves in fair value securities through other comprehensive income are presented as follows:
217
Impairment movement of securities at fair value
through other comprehensive income
Stage 1
Stage 2
Stage 3
Total
(in thousands of Euros)
5 556
3 516
( 5 080)
( 232)
( 70)
3 690
1 302
( 928)
( 384)
36
3 716
-
38
-
( 44)
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5 556
3 554
( 5 080)
( 276)
( 64)
3 690
1 302
( 928)
( 384)
36
3 716
(in thousands of Euros)
Impairment movement of securities at amortised cost
Stage 1
Stage 2
Stage 3
Total
2 296
54 056
102 422
158 774
717 848
( 683 933)
( 2)
( 317)
10 533
( 3 294)
-
( 1)
738 568
( 696 043)
( 38)
( 24)
3 925
87 652
109 660
201 237
1 058 301
( 1 107 621)
( 1)
( 48)
148 112
( 53 046)
( 1 640)
157
1 215 760
( 1 168 355)
( 1 653)
8
38 283
203 243
246 997
10 187
( 8 816)
( 36)
294
9 347
( 7 688)
( 12)
( 101)
5 471
Changes in impairment losses on amortised cost securities are as follows:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 59 -
Balance as at 31 December 2019
Increases due to changes in credit risk
Decreases due to changes in credit risk
Utilization during the period
Other movements
Balance as at 31 December 2020
Increases due to changes in credit risk
Decreases due to changes in credit risk
Utilization during the period
Other movements
Balance as at 31 December 2021
Balance as at 31 December 2019
Increases due to changes in credit risk
Decreases due to changes in credit risk
Utilization during the period
Other movements
Balance as at 31 December 2020
Increases due to changes in credit risk
Decreases due to changes in credit risk
Utilization during the period
Other movements
Balance as at 31 December 2021
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Bonds and other fixed income securities
Bonds and other fixed income securities
Non residents
From public issuers
Residents
From other issuers
From public issuers
Residents
Residents
Non residents
Non residents
From other issuers
Shares
Residents
Residents
Non residents
Non residents
Shares
Other securities with variable income
Residents
Residents
Non residents
Saldo a 31 de dezembro de 2020
Other securities with variable income
(1) Aquisition cost referring to shares and other equity instruments and amortized cost for debt securities.
Residents
Cost (1)
Cost (1)
6 130 285
2 650 953
3 479 332
1 286 344
6 130 285
29 605
2 650 953
1 256 739
3 479 332
1 286 344
463 232
29 605
359 127
1 256 739
104 105
463 232
359 127
2
2
104 105
2
2
Fair value reserve
Positive
Negative
Fair value reserve
360 033
Positive
129 520
230 513
68 749
360 033
129 520
107
68 642
230 513
68 749
18 163
107
15 396
68 642
2 767
18 163
15 396
2 767
-
-
-
-
Negative
( 242)
-
( 242)
( 2 334)
( 242)
( 2 334)
-
( 242)
-
( 2 334)
( 416 643)
( 2 334)
( 319 824)
( 96 819)
-
( 416 643)
( 2)
( 319 824)
( 2)
( 96 819)
( 419 221)
( 2)
( 2)
(in thousands of Euros)
Book value
Impairment
(in thousands of Euros)
reserves
Book value
6 490 076
Impairment
reserves
( 3 125)
2 780 473
3 709 603
1 352 759
6 490 076
27 378
2 780 473
1 325 381
3 709 603
1 352 759
64 752
27 378
54 699
1 325 381
10 053
64 752
54 699
10 053
-
-
-
-
( 1 435)
( 1 690)
( 565)
( 3 125)
( 1 435)
( 3)
( 562)
( 1 690)
( 565)
( 3)
( 562)
-
-
-
-
-
-
-
-
-
-
7 879 863
446 945
7 907 587
( 3 690)
( 3 690)
Saldo a 31 de dezembro de 2020
During the year 2021, the Group sold Euro 956.1 million of financial instruments classified at fair value through other comprehensive
(1) Aquisition cost referring to shares and other equity instruments and amortized cost for debt securities.
income (31 December 2020: Euro 1,323.9 million), with a gain of Euro 14.4 million (31 December 2020: gain of Euro 82.4 million),
recorded in the income statement, from the sale of debt instruments and a loss of Euro 20.5 million that were transferred from
During the year 2021, the Group sold Euro 956.1 million of financial instruments classified at fair value through other comprehensive
revaluation reserves to sales-related reserves (31 December 2020: loss of Euro 15.0 million), from the sale of equity instruments.
income (31 December 2020: Euro 1,323.9 million), with a gain of Euro 14.4 million (31 December 2020: gain of Euro 82.4 million),
recorded in the income statement, from the sale of debt instruments and a loss of Euro 20.5 million that were transferred from
The movements in the impairment reserves in fair value securities through other comprehensive income are presented as follows:
revaluation reserves to sales-related reserves (31 December 2020: loss of Euro 15.0 million), from the sale of equity instruments.
7 879 863
7 907 587
( 419 221)
446 945
(in thousands of Euros)
The movements in the impairment reserves in fair value securities through other comprehensive income are presented as follows:
Impairment movement of securities at fair value
through other comprehensive income
Stage 1
Stage 2
Impairment movement of securities at fair value
through other comprehensive income
-
-
5 556
Stage 3
(in thousands of Euros)
Total
Balance as at 31 December 2019
Balance as at 31 December 2020
Balance as at 31 December 2019
Increases due to changes in credit risk
Decreases due to changes in credit risk
Utilization during the period
Increases due to changes in credit risk
Other movements
Decreases due to changes in credit risk
Utilization during the period
Other movements
Increases due to changes in credit risk
Decreases due to changes in credit risk
Utilization during the period
Increases due to changes in credit risk
Other movements
Decreases due to changes in credit risk
Utilization during the period
Other movements
Balance as at 31 December 2020
Balance as at 31 December 2021
Balance as at 31 December 2019
Balance as at 31 December 2019
Balance as at 31 December 2020
Increases due to changes in credit risk
Decreases due to changes in credit risk
Utilization during the period
Increases due to changes in credit risk
Other movements
Decreases due to changes in credit risk
Utilization during the period
Other movements
Increases due to changes in credit risk
Decreases due to changes in credit risk
Utilization during the period
Increases due to changes in credit risk
Other movements
Decreases due to changes in credit risk
Utilization during the period
Other movements
Balance as at 31 December 2021
Balance as at 31 December 2020
Stage 1
3 516
( 5 080)
5 556
( 232)
3 516
( 70)
( 5 080)
3 690
( 232)
( 70)
1 302
( 928)
3 690
( 384)
1 302
36
( 928)
3 716
( 384)
36
Stage 2
38
-
-
( 44)
38
6
-
-
( 44)
6
-
-
-
-
-
-
-
-
-
-
Stage 3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Impairment movement of securities at amortised cost
54 056
102 422
2 296
Stage 1
10 187
( 8 816)
2 296
( 36)
10 187
294
( 8 816)
3 925
( 36)
294
9 347
( 7 688)
3 925
( 12)
9 347
( 101)
( 7 688)
5 471
( 12)
( 101)
Stage 2
717 848
( 683 933)
54 056
( 2)
717 848
( 317)
( 683 933)
87 652
( 2)
( 317)
1 058 301
( 1 107 621)
87 652
( 1)
1 058 301
( 48)
( 1 107 621)
38 283
( 1)
( 48)
Stage 3
10 533
( 3 294)
102 422
-
10 533
( 1)
( 3 294)
109 660
-
( 1)
148 112
( 53 046)
109 660
( 1 640)
148 112
157
( 53 046)
203 243
( 1 640)
157
5 556
Total
3 554
( 5 080)
5 556
( 276)
3 554
( 64)
( 5 080)
3 690
( 276)
( 64)
1 302
( 928)
3 690
( 384)
1 302
36
( 928)
3 716
( 384)
36
3 716
158 774
Total
738 568
( 696 043)
158 774
( 38)
738 568
( 24)
( 696 043)
201 237
( 38)
( 24)
1 215 760
( 1 168 355)
201 237
( 1 653)
1 215 760
8
( 1 168 355)
246 997
( 1 653)
8
Changes in impairment losses on amortised cost securities are as follows:
Balance as at 31 December 2021
3 716
-
Changes in impairment losses on amortised cost securities are as follows:
Changes in impairment losses on amortised cost securities are as follows:
Impairment movement of securities at amortised cost
(in thousands of Euros)
Stage 1
Stage 2
Stage 3
(in thousands of Euros)
Total
Balance as at 31 December 2021
5 471
38 283
203 243
246 997
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 59 -
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the accounting policy mentioned on Note 7.16, the Group regularly evaluate if
there is any objective evidence of impairment in its securities portfolio at a fair value through other
comprehensive income based on the judgement criteria mentioned on Note 8.1.
The dotation for impairment for securities during 2020 financial year include Euro 29.0 million, reflecting
the update of information in IFRS 9 models, anticipating losses related to the Covid-19 pandemic.
- 59 -
As at 31 December 2021 and 2020, the securities portfolio, by residual maturity period, is as follows:
218
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
In accordance with the accounting policy mentioned on Note 7.16, the Group regularly evaluate if there is any objective evidence of
impairment in its securities portfolio at a fair value through other comprehensive income based on the judgement criteria mentioned
on Note 8.1.
In accordance with the accounting policy mentioned on Note 7.16, the Group regularly evaluate if there is any objective evidence of
impairment in its securities portfolio at a fair value through other comprehensive income based on the judgement criteria mentioned
The dotation for impairment for securities during 2020 financial year include Euro 29.0 million, reflecting the update of information in
on Note 8.1.
IFRS 9 models, anticipating losses related to the Covid-19 pandemic.
The dotation for impairment for securities during 2020 financial year include Euro 29.0 million, reflecting the update of information in
As at 31 December 2021 and 2020, the securities portfolio, by residual maturity period, is as follows:
IFRS 9 models, anticipating losses related to the Covid-19 pandemic.
As at 31 December 2021 and 2020, the securities portfolio, by residual maturity period, is as follows:
Securities at fair value through profit or loss - mandatory
Securities at fair value through profit or loss - mandatory
Securities at fair value through other comprehensive income
Securities at fair value through other comprehensive income
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
Up to 3 months
More than 5 years
From 3 months to 1 year
Undetermined duration
From 1 to 5 years
More than 5 years
Undetermined duration
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
Up to 3 months
More than 5 years
From 3 months to 1 year
Undetermined duration
From 1 to 5 years
More than 5 years
Undetermined duration
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
Up to 3 months
More than 5 years
From 3 months to 1 year
Undetermined duration
From 1 to 5 years
More than 5 years
Undetermined duration
Securities at amortised cost (*)
Securities at amortised cost (*)
(in thousands of Euros)
31.12.2021
31.12.2020
(in thousands of Euros)
31.12.2021
41 741
-
2 443
41 741
10 776
-
744 632
2 443
799 592
10 776
744 632
799 592
451 416
989 621
3 033 249
451 416
2 686 330
989 621
60 380
3 033 249
7 220 996
2 686 330
60 380
7 220 996
710 014
139 547
478 503
710 014
1 257 630
139 547
-
478 503
2 585 694
1 257 630
-
10 606 282
2 585 694
31.12.2020
75 553
32 670
39 966
75 553
11 995
32 670
800 778
39 966
960 962
11 995
800 778
960 962
218 275
791 578
3 906 220
218 275
2 926 762
791 578
64 752
3 906 220
7 907 587
2 926 762
64 752
7 907 587
772 795
113 105
267 980
772 795
1 277 304
113 105
-
267 980
2 431 184
1 277 304
-
11 299 733
2 431 184
10 606 282
11 299 733
The detail of the securities portfolio by fair value hierarchy is presented in Note 42.
(*) Gross value before impairment
The detail of the securities portfolio by fair value hierarchy is presented in Note 42.
(*) Gross value before impairment
The portfolio securities pledged by the Group are analysed in Note 38.
The portfolio securities pledged by the Group are analysed in Note 38.
The detail of the securities portfolio by fair value hierarchy is presented in Note 42.
Loans and advances to Banks
The portfolio securities pledged by the Group are analysed in Note 38.
Loans and advances to Banks
As at 31 December 2021 and 31 December 2020, the detail of Loans and advances to Banks is as follows:
As at 31 December 2021 and 31 December 2020, the detail of Loans and advances to Banks is as follows:
Loans and advances to Banks
(in thousands of Euros)
As at 31 December 2021 and 31 December 2020, the detail of Loans and advances to Banks is as follows:
31.12.2021
31.12.2020
Loans and advances to banks in Portugal
Loans and advances to banks in Portugal
Very short-term placements
Deposits
Loans
Very short-term placements
Other loans and advances
Deposits
Loans
Other loans and advances
Loans and advances to banks abroad
31.12.2021
31.12.2020
(in thousands of Euros)
-
715
44 770
-
3
715
45 488
44 770
3
4 075
4 897
30 280
4 075
4
4 897
39 256
30 280
4
Deposits
Other loans and advances
Loans and advances to banks abroad
Deposits
Other loans and advances
Outstanding applications
Outstanding applications
Impairment losses
Impairment losses
Investments in credit institutions are all recorded in the amortised cost portfolio.
Investments in credit institutions are all recorded in the amortised cost portfolio.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6 089
45 488
2
6 089
6 091
2
-
6 091
51 579
-
( 1 113)
51 579
50 466
( 1 113)
10 532
39 256
279 419
10 532
289 951
279 419
34 726
289 951
363 933
34 726
( 250 138)
363 933
113 795
( 250 138)
50 466
113 795
- 60 -
- 60 -
219
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Investments in credit institutions are all recorded in the amortised cost portfolio.
As at 31 December 2021 and 2020, the analysis of loans and advances to banks, by residual maturity
is as follows:
As at 31 December 2021 and 2020, the analysis of loans and advances to banks, by residual maturity is as follows:
(in thousands of Euros)
As at 31 December 2021 and 2020, the analysis of loans and advances to banks, by residual maturity is as follows:
31.12.2021
31.12.2020
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
Up to 3 months
Undetermined duration (Overdue)
From 3 months to 1 year
From 1 to 5 years
More than 5 years
Undetermined duration (Overdue)
31.12.2021
861
6 558
38 193
5 967
861
-
6 558
38 193
51 579
5 967
-
(in thousands of Euros)
31.12.2020
16 200
4 854
302 182
5 971
16 200
34 726
4 854
302 182
363 933
5 971
34 726
Changes in impairment losses on loans and advances to banks are presented as follows:
Loans and advances to Banks
Changes in impairment losses on loans and advances to banks are presented as follows:
51 579
363 933
(in thousands of Euros)
Changes in impairment losses on loans and advances to banks are presented as follows:
Stage 1
Stage 2
Stage 3
Total
(in thousands of Euros)
77 088
Balance as at 31 December 2019
Increases due to changes in credit risk
Decreases due to changes in credit risk
Other movements
Balance as at 31 December 2019
318
Stage 1
536
( 436)
318
12
Loans and advances to Banks
76 341
429
Stage 2
2 457
( 1 948)
76 341
( 76 848)
317 540
Stage 3
( 128 520)
429
60 257
320 533
Total
( 130 904)
77 088
( 16 579)
Balance as at 31 December 2021
Balance as at 31 December 2020
Balance as at 31 December 2020
Increases due to changes in credit risk
Decreases due to changes in credit risk
Increases due to changes in credit risk
Other movements
Decreases due to changes in credit risk
Utilization during the period
Other movements
Increases due to changes in credit risk
Decreases due to changes in credit risk
Utilization during the period
Other movements
320 533
250 138
( 130 904)
135 814
( 16 579)
( 134 065)
250 138
( 269 010)
18 236
135 814
( 134 065)
1 113
( 269 010)
18 236
The increase of impairment for investments in credit institutions verified in 2020 results from the degradation of the credit risk of
1 113
Balance as at 31 December 2021
international exposures analyzed on an individual basis, whose partial default situation at the end of 2020, among other signs of
impairment, led to the transfer of the same to stage 3 and the constitution of additional impairments of Euro 189.6 million. During
2021 part of this exposure was settled, with the remaining exposure being restructured and subsequently derecognised, in line with
The increase of impairment for investments in credit institutions verified in 2020 results from the degradation of the credit risk of
the amendment made in May 2021 to the Contingent Capital Mechanism contract, which extinguished novobanco’s rights and risks
international exposures analysed on an individual basis, whose partial default situation at the end of 2020, among other signs of
on this asset.
impairment, led to the transfer of the same to stage 3 and the constitution of additional impairments of Euro 189.6 million . During
2021 part of this exposure was settled, with the remaining exposure being restructured and subsequently derecognised, in line with
the amendment made in May 2021 to the Contingent Capital Mechanism contract, which extinguished novobanco’s rights and risks
on this asset.
317 540
249 706
( 128 520)
134 063
60 257
( 132 564)
249 706
( 167 728)
( 83 055)
134 063
( 132 564)
422
( 167 728)
( 83 055)
536
430
( 436)
1 210
12
( 1 399)
430
( 101 282)
101 258
1 210
( 1 399)
217
( 101 282)
101 258
2 457
2
( 1 948)
541
( 76 848)
( 102)
2
-
33
541
( 102)
474
-
33
422
474
217
The increase of impairment for investments in credit institutions verified in 2020 results from the
degradation of the credit risk of international exposures analysed on an individual basis, whose partial
default situation at the end of 2020, among other signs of impairment, led to the transfer of the same
to stage 3 and the constitution of additional impairments of Euro 189.6 million. During 2021 part of this
exposure was settled, with the remaining exposure being restructured and subsequently derecognised,
in line with the amendment made in May 2021 to the Contingent Capital Mechanism contract, which
extinguished novobanco’s rights and risks on this asset.
Loans and advances to customers
As at 31 December 2021 and 31 December 2020, the detail of loans and advances to customers is
presented as follows:
220
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 61 -
- 62 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Loans and advances to customers
As at 31 December 2021 and 31 December 2020, the detail of loans and advances to customers is presented as follows:
Domestic loans and advances
Corporate
Current account loans
Loans
Discounted bills
Factoring
Overdrafts
Financial leases
Other loans and advances
Individuals
Residential Mortgage loans
Consumer credit and other loans
Foreign loans and advances
Corporate
Current account loans
Loans
Discounted bills
Factoring
Descobertos
Other loans and advances
Individuals
Residential Mortgage loans
Consumer credit and other loans
Overdue loans and advances and interests
Under 90 days
Over 90 days
Impairment losses
Fair value adjustaments of interest rate hedges (see Note 25)
Corporate
Loans
Individuals
Residential Mortgage loans
Loans to customers are all recorded in the amortised cost portfolio.
(milhares de euros)
31.12.2021
31.12.2020
1 139 614
8 917 738
76 741
595 334
13 457
1 245 885
17 814
8 733 283
1 193 500
1 147 959
8 980 908
81 843
576 766
7 109
1 421 599
21 077
8 977 196
1 118 813
21 933 366
22 333 270
66 348
1 319 819
2
40 519
54
1
1 038 286
190 201
2 655 230
20 010
290 050
310 060
851 881
146 986
4
51 483
8 321
1
950 312
186 020
2 195 008
15 632
610 169
625 801
24 898 656
25 154 079
(1 247 917)
(1 599 775)
23 650 739
23 554 304
4 035
6 774
29 762
33 797
55 956
62 730
23 684 536
23 617 034
Loans to customers are all recorded in the amortised cost portfolio.
As at 31 December 2021, the amount of loans and advances to customers (net of impairment) includes
the amount of Euro 1,255.1 million (31 December 2020: Euro 1,390.3 million), related to securitization
operations in which, according to the accounting policy referred to in Note 6, structured entities are
consolidated by the Group (see Notes 1 and 41). The liabilities associated with these securitization
operations were recognized as Debt Securities (see Note 33).
As at 31 December 2021, the amount of loans and advances to customers (net of impairment) includes the amount of Euro 1,255.1
million (31 December 2020: Euro 1,390.3 million), related to securitization operations in which, according to the accounting policy
referred to in Note 6, structured entities are consolidated by the Group (see Notes 1 and 41). The liabilities associated with these
securitization operations were recognized as Debt Securities (see Note 33).
As at 31 December 2021, the caption Loans and advances to customers include Euro 6,075.1 million of
mortgage loans related to the issuance of mortgage bonds (31 December 2020: Euro 6,104.8 million)
(see Note 33).
As at 31 December 2021, the caption Loans and advances to customers include Euro 6,075.1 million of mortgage loans related to
the issuance of mortgage bonds (31 December 2020: Euro 6,104.8 million) (see Note 33).
As at 31 December 2021, the amount of interest and commissions recorded in the balance sheet relating
to credit operations amounts to Euro 18,614 thousand (31 December 2020: Euro 25,256 thousand).
As at 31 December 2021, the amount of interest and commissions recorded in the balance sheet relating to credit operations amounts
to Euro 18,614 thousand (31 December 2020: Euro 25,256 thousand).
As at 31 December 2021 and 2020, the analysis of loans and advances to customers, by residual
maturity, is as follows:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 62 -
221
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
As at 31 December 2021 and 2020, the analysis of loans and advances to customers, by residual maturity, is as follows:
As at 31 December 2021 and 2020, the analysis of loans and advances to customers, by residual maturity, is as follows:
(in thousands of Euros)
31.12.2021
31.12.2020
(in thousands of Euros)
As at 31 December 2021 and 2020, the analysis of loans and advances to customers, by residual maturity, is as follows:
Up to 3 months
From 3 months to 1 year
Up to 3 months
From 1 to 5 years
From 3 months to 1 year
More than 5 years
From 1 to 5 years
Undetermined duration (Overdue)
More than 5 years
Undetermined duration (Overdue)
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
Undetermined duration (Overdue)
31.12.2021
31.12.2021
1 211 004
1 303 386
1 211 004
5 825 536
1 303 386
16 282 467
5 825 536
310 060
16 282 467
24 932 453
310 060
1 211 004
1 303 386
24 932 453
5 825 536
16 282 467
310 060
31.12.2020
31.12.2020
1 049 929
1 299 816
1 049 929
5 157 298
1 299 816
(in thousands of Euros)
17 083 965
5 157 298
625 801
17 083 965
25 216 809
625 801
1 049 929
1 299 816
25 216 809
5 157 298
17 083 965
(in thousands of Euros)
625 801
Changes in credit impairment losses are presented as follows:
Changes in credit impairment losses are presented as follows:
Changes in credit impairment losses are presented as follows:
Changes in credit impairment losses are presented as follows:
Balance as at 31 December 2019
Stage 1
53 945
Stage 2
139 775
Stage 3
1 658 775
1 852 495
Total
Credit impairment changes
24 932 453
(in thousands of Euros)
25 216 809
Stage 1
Credit impairment changes
Stage 2
Stage 3
Total
Credit impairment changes
Balance as at 31 December 2019
Balance as at 31 December 2019
Financial assets derecognised
Increases due to changes in credit risk
Financial assets derecognised
Decreases due to changes in credit risk
Increases due to changes in credit risk
Utilization during the period
Decreases due to changes in credit risk
Other movements
Utilization during the period
Other movements
Balance as at 31 December 2020
Financial assets derecognised
Increases due to changes in credit risk
Balance as at 31 December 2020
Financial assets derecognised
Decreases due to changes in credit risk
Increases due to changes in credit risk
Financial assets derecognised
Utilization during the period
Decreases due to changes in credit risk
Increases due to changes in credit risk
Other movements
Utilization during the period
Decreases due to changes in credit risk
Other movements (a)
Utilization during the period
Other movements (a)
Balance as at 31 December 2021
Financial assets derecognised
Increases due to changes in credit risk
(a) It includes Euro 58,046 thousand of impairment of credits of the Spanish Branch transferred to discontinued operations (Euro 22,427 thousand in stage 1 and Euro 35,619 thousand in
stage 3).
Decreases due to changes in credit risk
(a) It includes Euro 58,046 thousand of impairment of credits of the Spanish Branch transferred to discontinued operations (Euro 22,427 thousand in stage 1 and Euro 35,619 thousand in
Utilization during the period
stage 3).
Other movements (a)
1 852 495
( 294 007)
(in thousands of Euros)
808 179
( 294 007)
( 283 737)
808 179
Total
( 441 450)
( 283 737)
( 41 705)
1 852 495
( 441 450)
( 41 705)
1 599 775
( 294 007)
808 179
1 599 775
( 244 059)
( 283 737)
301 426
( 244 059)
( 441 450)
( 152 051)
301 426
( 41 705)
( 267 202)
( 152 051)
10 028
1 599 775
( 267 202)
1 658 775
( 294 005)
428 745
( 294 005)
( 68 607)
428 745
Stage 3
( 441 321)
( 68 607)
( 55 246)
1 658 775
( 441 321)
( 55 246)
1 228 341
( 294 005)
428 745
1 228 341
( 239 704)
( 68 607)
155 547
( 239 704)
( 441 321)
( 46 713)
155 547
( 55 246)
( 267 008)
( 46 713)
31 685
1 228 341
( 267 008)
53 945
( 2)
40 289
( 2)
( 116 192)
40 289
Stage 1
( 16)
( 116 192)
83 405
53 945
( 16)
83 405
61 429
( 2)
40 289
61 429
( 1 282)
( 116 192)
22 683
( 1 282)
( 16)
( 47 899)
22 683
83 405
-
( 47 899)
28 644
61 429
-
139 775
-
339 145
-
( 98 938)
339 145
Stage 2
( 113)
( 98 938)
( 69 864)
139 775
( 113)
( 69 864)
310 005
-
339 145
310 005
( 3 073)
( 98 938)
123 196
( 3 073)
( 113)
( 57 439)
123 196
( 69 864)
( 194)
( 57 439)
( 50 301)
310 005
( 194)
The increase of impairment for credit risk during the year 2021 include Euro 71.8 million, reflecting the updating of the information in
10 028
the IFRS 9 models, anticipating the losses related to the Covid-19 pandemic (31 December 2020: Euro 218.8 million).
The increase of impairment for credit risk during the year 2021 include Euro 71.8 million, reflecting the updating of the information in
1 247 917
Balance as at 31 December 2021
the IFRS 9 models, anticipating the losses related to the Covid-19 pandemic (31 December 2020: Euro 218.8 million).
Credit distribution by type of rate is as follows:
(a) It includes Euro 58,046 thousand of impairment of credits of the Spanish Branch transferred to discontinued operations (Euro 22,427 thousand in stage 1 and Euro 35,619 thousand in
stage 3).
10 028
1 247 917
( 244 059)
301 426
1 247 917
( 152 051)
( 267 202)
31 685
862 148
( 239 704)
155 547
862 148
( 46 713)
( 267 008)
( 50 301)
322 194
( 3 073)
123 196
322 194
( 57 439)
( 194)
28 644
63 575
( 1 282)
22 683
63 575
( 47 899)
-
Balance as at 31 December 2021
Balance as at 31 December 2020
862 148
322 194
( 50 301)
28 644
31 685
63 575
The increase of impairment for credit risk during the year 2021 include Euro 71.8 million, reflecting
the updating of the information in the IFRS 9 models, anticipating the losses related to the Covid-19
pandemic (31 December 2020: Euro 218.8 million).
Credit distribution by type of rate is as follows:
31.12.2020
The increase of impairment for credit risk during the year 2021 include Euro 71.8 million, reflecting the updating of the information in
(in thousands of Euros)
the IFRS 9 models, anticipating the losses related to the Covid-19 pandemic (31 December 2020: Euro 218.8 million).
31.12.2021
(in thousands of Euros)
Credit distribution by type of rate is as follows:
Credit distribution by type of rate is as follows:
Fixed rate
Variable rate
Fixed rate
Variable rate
31.12.2021
4 075 515
20 856 938
4 075 515
20 856 938
24 932 453
31.12.2021
24 932 453
31.12.2020
3 982 917
21 233 892
3 982 917
21 233 892
25 216 809
31.12.2020
25 216 809
(in thousands of Euros)
Fixed rate
Variable rate
4 075 515
20 856 938
3 982 917
21 233 892
24 932 453
25 216 809
222
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 63 -
- 63 -
- 63 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
An analysis of finance lease loans, by residual maturity period, is presented as follows:
An analysis of finance lease loans, by residual maturity period, is presented as follows:
31.12.2021
31.12.2020
(in thousands of Euros)
Gross investment in finance leases receivable
An analysis of finance lease loans, by residual maturity period, is presented as follows:
Up to 1 year
1 to 5 years
More than 5 years
Gross investment in finance leases receivable
Unrealized finance income in finance leases
Up to 1 year
Up to 1 year
1 to 5 years
1 to 5 years
More than 5 years
More than 5 years
Unrealized finance income in finance leases
Present value of minimum lease payments receivable
Up to 1 year
Up to 1 year
1 to 5 years
1 to 5 years
More than 5 years
More than 5 years
Present value of minimum lease payments receivable
Impairment
Up to 1 year
1 to 5 years
More than 5 years
Sales of credit portfolios
Impairment
2021
278 587
693 762
533 443
31.12.2021
1 505 792
(in thousands of Euros)
270 188
761 487
571 105
31.12.2020
1 602 780
278 587
43 611
693 762
94 599
533 443
91 120
1 505 792
229 330
43 611
234 976
94 599
599 163
91 120
442 323
229 330
1 276 462
( 226 204)
234 976
599 163
1 050 258
442 323
1 276 462
( 226 204)
270 188
44 830
761 487
67 455
571 105
32 654
1 602 780
144 939
44 830
225 358
67 455
694 032
32 654
538 285
144 939
1 457 675
( 220 447)
225 358
694 032
1 237 228
538 285
1 457 675
( 220 447)
Sales of credit portfolios
2021
Sale of a non-performing loans portfolio (Project Orion)
novobanco entered into sale and purchase agreements with a consortium of funds managed by WEST INVEST UK LIMITED
Sales of credit portfolios
PARTNERSHIP and LX INVESTMENT PARTNERS III S.À.R.L. for the sale of a non-performing loans and related assets portfolio
(Project Orion). The net book value of the receivables at the date of derecognition amounted to Euro 76.1 million (gross book value
2021
of Euro 162.9 million), with an impact on net income for the year 2021 of approximately Euro 1.8 million:
Sale of a non-performing loans portfolio (Project Orion)
novobanco entered into sale and purchase agreements with a consortium of funds managed by WEST
INVEST UK LIMITED PARTNERSHIP and LX INVESTMENT PARTNERS III S.À.R.L. for the sale of a non-
performing loans and related assets portfolio (Project Orion). The net book value of the receivables at
the date of derecognition amounted to Euro 76.1 million (gross book value of Euro 162.9 million), with
an impact on net income for the year 2021 of approximately Euro 1.8 million:
Sale of a non-performing loans portfolio (Project Orion)
(in thousands of Euros)
novobanco entered into sale and purchase agreements with a consortium of funds managed by WEST INVEST UK LIMITED
Impact on the Income Statement
PARTNERSHIP and LX INVESTMENT PARTNERS III S.À.R.L. for the sale of a non-performing loans and related assets portfolio
(Project Orion). The net book value of the receivables at the date of derecognition amounted to Euro 76.1 million (gross book value
Gains or losses from derecognition of financial assets and liabilities not measured at fair value through profit or loss
-10 159
of Euro 162.9 million), with an impact on net income for the year 2021 of approximately Euro 1.8 million:
31.12.2021
1 050 258
1 237 228
Impairments or reversal of impairments of financial assets not measured at fair value through profit or loss
Provisions or reversal of provisions
Impact on the Income Statement
Impact on Net income
Gains or losses from derecognition of financial assets and liabilities not measured at fair value through profit or loss
Impairments or reversal of impairments of financial assets not measured at fair value through profit or loss
19 295
(in thousands of Euros)
-7 310
31.12.2021
1 826
-10 159
19 295
Sale of a non-performing loans portfolio (Project Wilkinson)
-7 310
Provisions or reversal of provisions
On March 5, 2021, novobanco entered into a sale and purchase agreement to sell a non-performing loans and related assets portfolio
(Project Wilkinson), with a net book value of Euro 62.3 million (gross book value of Euro 210.4 million), with Burlington Loan
1 826
Impact on Net income
Management, a company owned by companies affiliated to and advised by Davidson Kempner European Partners, LLP. The impact
of this operation on net income for 2021 resulted in a loss of Euro 4.5 million.
Sale of a non-performing loans portfolio (Project Wilkinson)
(in thousands of Euros)
On March 5, 2021, novobanco entered into a sale and purchase agreement to sell a non-performing loans and related assets portfolio
Impact on the Income Statement
31.12.2021
(Project Wilkinson), with a net book value of Euro 62.3 million (gross book value of Euro 210.4 million), with Burlington Loan
Gains or losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
-1 363
Management, a company owned by companies affiliated to and advised by Davidson Kempner European Partners, LLP. The impact
-3 175
Impairments or reversals of impairments on financial assets not measured at fair value through profit or loss
of this operation on net income for 2021 resulted in a loss of Euro 4.5 million.
Impact on Net Income
Impact on the Income Statement
Impact on Net Income
Gains or losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
Impairments or reversals of impairments on financial assets not measured at fair value through profit or loss
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
-4 538
(in thousands of Euros)
31.12.2021
-1 363
-3 175
-4 538
- 64 -
- 64 -
223
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
An analysis of finance lease loans, by residual maturity period, is presented as follows:
31.12.2021
31.12.2020
(in thousands of Euros)
Gross investment in finance leases receivable
Unrealized finance income in finance leases
Up to 1 year
1 to 5 years
More than 5 years
Up to 1 year
1 to 5 years
More than 5 years
Up to 1 year
1 to 5 years
More than 5 years
Impairment
Present value of minimum lease payments receivable
Sales of credit portfolios
2021
278 587
693 762
533 443
1 505 792
43 611
94 599
91 120
229 330
234 976
599 163
442 323
1 276 462
( 226 204)
1 050 258
270 188
761 487
571 105
1 602 780
44 830
67 455
32 654
144 939
225 358
694 032
538 285
1 457 675
( 220 447)
1 237 228
Sale of a non-performing loans portfolio (Project Orion)
novobanco entered into sale and purchase agreements with a consortium of funds managed by WEST INVEST UK LIMITED
PARTNERSHIP and LX INVESTMENT PARTNERS III S.À.R.L. for the sale of a non-performing loans and related assets portfolio
(Project Orion). The net book value of the receivables at the date of derecognition amounted to Euro 76.1 million (gross book value
of Euro 162.9 million), with an impact on net income for the year 2021 of approximately Euro 1.8 million:
Impact on the Income Statement
Gains or losses from derecognition of financial assets and liabilities not measured at fair value through profit or loss
Impairments or reversal of impairments of financial assets not measured at fair value through profit or loss
Provisions or reversal of provisions
Impact on Net income
(in thousands of Euros)
31.12.2021
-10 159
19 295
-7 310
1 826
Sale of a non-performing loans portfolio (Project Wilkinson)
On March 5, 2021, novobanco entered into a sale and purchase agreement to sell a non-performing
loans and related assets portfolio (Project Wilkinson), with a net book value of Euro 62.3 million (gross
book value of Euro 210.4 million), with Burlington Loan Management, a company owned by companies
affiliated to and advised by Davidson Kempner European Partners, LLP. The impact of this operation on
net income for 2021 resulted in a loss of Euro 4.5 million.
Sale of a non-performing loans portfolio (Project Wilkinson)
On March 5, 2021, novobanco entered into a sale and purchase agreement to sell a non-performing loans and related assets portfolio
(Project Wilkinson), with a net book value of Euro 62.3 million (gross book value of Euro 210.4 million), with Burlington Loan
Management, a company owned by companies affiliated to and advised by Davidson Kempner European Partners, LLP. The impact
of this operation on net income for 2021 resulted in a loss of Euro 4.5 million.
Impact on the Income Statement
Gains or losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
Impairments or reversals of impairments on financial assets not measured at fair value through profit or loss
Impact on Net Income
2020
Sale of a non-performing loans portfolio (Project Carter)
On December 23, 2020, novobanco entered into a purchase and sale agreement for a portfolio of
non-performing loans and related assets (together, the Carter Project), with a net book value of Euro
37.0 million (gross book value of Euro 82.8 million), to a company owned by affiliated companies and
advised by AGG Capital Management Limited and Christofferson, Robb & Company, LLC. The impact of
this operation on the net income for the year 2020 resulted in a gain of Euro 2.9 million.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2020
Sale of a non-performing loans portfolio (Project Carter)
On December 23, 2020, novobanco entered into a purchase and sale agreement for a portfolio of non-performing loans and related
assets (together, the Carter Project), with a net book value of Euro 37.0 million (gross book value of Euro 82.8 million), to a company
owned by affiliated companies and advised by AGG Capital Management Limited and Christofferson, Robb & Company, LLC. The
impact of this operation on the net income for the year 2020 resulted in a gain of Euro 2.9 million.
(in thousands of Euros)
31.12.2021
-1 363
-3 175
-4 538
- 64 -
Impact on Income Statement
Results from the sale of financial assets and liabilities not designated at fair value through profit or loss
Impairment net of reversals of financial assets not designated at fair value through profit or loss
Impact on Net Income
(in thousands of Euros)
31.12.2020
3 337
-405
2 932
NOTE 25 – DERIVATIVES – HEDGE ACCOUNTING AND FAIR VALUE CHANGES OF THE HEDGED ITEMS
At 31 December 2021 and 31 December 2020, the fair value of the hedging derivatives is analysed as follows:
Hedging derivatives
Assets
Liabilities
Fair value component of the assets and liabilities hedged for interest rate risk
Financial assets
Securities (see Note 24)
Loans to customers (see Note 24)
(in thousands of Euros)
31.12.2021
31.12.2020
19 639
( 44 460)
( 24 821)
12 972
( 72 543)
( 59 571)
( 3 136)
33 797
30 661
1 129
62 730
63 859
Changes in the fair value of the hedged assets and liabilities mentioned above and of the respective hedging derivatives are
recognized in the income statement in the caption Gains and losses from hedge accounting. (see Note 13).
The Group calculates the “Credit Valuation Adjustment” (CVA) for derivative instruments in accordance with the methodology
described in Note 42 - financial assets and liabilities held for trading.
As at 31 December 2021 and 2020, fair value hedging operations may be analyzed as follows:
Derivative
Hedged item
Hedged risk
Notional
Interest Rate Swap
Securities at amortized cost
Interest Rate Swap/ CIRS
Loans to customers
Interest rate
378 000
Interest and exchange rates
2 473 019
4 184
( 29 005)
3 675
31 118
( 3 136)
33 797
( 4 265)
( 28 935)
2 851 019
( 24 821)
34 793
30 661
( 33 200)
31.12.2021
31.12.2020
(in thousands of Euros)
Fair value of
derivatives (2)
Change in
fair value of
derivative in
period
Change in fair
Fair value
value
component of
component of
item hedged (2)
item hedged in
exercise (2)
(in thousands of Euros)
Fair value of
derivatives (2)
Change in
fair value of
derivative in
period
Change in fair
Fair value
value
component of
component of
item hedged (2)
item hedged in
exercise (2)
Derivative
Hedged item
Hedged risk
Notional
Interest Rate Swap
Securities at amortized cost
Interest Rate Swap/ CIRS
Loans to customers
Interest rate
378 000
Interest and exchange rates
3 325 224
665
( 60 236)
801
( 9 045)
1 129
62 730
1 130
11 416
3 703 224
( 59 571)
( 8 244)
63 859
12 546
(1) Attributable to hedged risk
(2) Includes accrued interest
(1) Attributable to hedged risk
(2) Includes accrued interest
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 65 -
224
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
2020
2020
Sale of a non-performing loans portfolio (Project Carter)
Sale of a non-performing loans portfolio (Project Carter)
On December 23, 2020, novobanco entered into a purchase and sale agreement for a portfolio of non-performing loans and related
On December 23, 2020, novobanco entered into a purchase and sale agreement for a portfolio of non-performing loans and related
assets (together, the Carter Project), with a net book value of Euro 37.0 million (gross book value of Euro 82.8 million), to a company
assets (together, the Carter Project), with a net book value of Euro 37.0 million (gross book value of Euro 82.8 million), to a company
owned by affiliated companies and advised by AGG Capital Management Limited and Christofferson, Robb & Company, LLC. The
owned by affiliated companies and advised by AGG Capital Management Limited and Christofferson, Robb & Company, LLC. The
impact of this operation on the net income for the year 2020 resulted in a gain of Euro 2.9 million.
impact of this operation on the net income for the year 2020 resulted in a gain of Euro 2.9 million.
(in thousands of Euros)
(in thousands of Euros)
NOTE 25 – DERIVATIVES – HEDGE ACCOUNTING
AND FAIR VALUE CHANGES OF THE HEDGED
ITEMS
Impact on Income Statement
Impact on Income Statement
Results from the sale of financial assets and liabilities not designated at fair value through profit or loss
Results from the sale of financial assets and liabilities not designated at fair value through profit or loss
Impairment net of reversals of financial assets not designated at fair value through profit or loss
Impairment net of reversals of financial assets not designated at fair value through profit or loss
Impact on Net Income
Impact on Net Income
At 31 December 2021 and 31 December 2020, the fair value of the hedging derivatives is analysed as
follows:
NOTE 25 – DERIVATIVES – HEDGE ACCOUNTING AND FAIR VALUE CHANGES OF THE HEDGED ITEMS
NOTE 25 – DERIVATIVES – HEDGE ACCOUNTING AND FAIR VALUE CHANGES OF THE HEDGED ITEMS
At 31 December 2021 and 31 December 2020, the fair value of the hedging derivatives is analysed as follows:
At 31 December 2021 and 31 December 2020, the fair value of the hedging derivatives is analysed as follows:
31.12.2020
31.12.2020
3 337
3 337
-405
-405
2 932
2 932
Hedging derivatives
Hedging derivatives
Assets
Assets
Liabilities
Liabilities
Fair value component of the assets and liabilities hedged for interest rate risk
Fair value component of the assets and liabilities hedged for interest rate risk
Financial assets
Financial assets
Securities (see Note 24)
Securities (see Note 24)
Loans to customers (see Note 24)
Loans to customers (see Note 24)
31.12.2021
31.12.2021
(in thousands of Euros)
(in thousands of Euros)
31.12.2020
31.12.2020
19 639
19 639
( 44 460)
( 44 460)
( 24 821)
( 24 821)
( 3 136)
( 3 136)
33 797
33 797
30 661
30 661
12 972
12 972
( 72 543)
( 72 543)
( 59 571)
( 59 571)
1 129
1 129
62 730
62 730
63 859
63 859
Changes in the fair value of the hedged assets and liabilities mentioned above and of the respective
hedging derivatives are recognized in the income statement in the caption Gains and losses from hedge
accounting. (see Note 13).
Changes in the fair value of the hedged assets and liabilities mentioned above and of the respective hedging derivatives are
Changes in the fair value of the hedged assets and liabilities mentioned above and of the respective hedging derivatives are
recognized in the income statement in the caption Gains and losses from hedge accounting. (see Note 13).
recognized in the income statement in the caption Gains and losses from hedge accounting. (see Note 13).
The Group calculates the “Credit Valuation Adjustment” (CVA) for derivative instruments in accordance with the methodology
The Group calculates the “Credit Valuation Adjustment” (CVA) for derivative instruments in accordance with the methodology
described in Note 42 - financial assets and liabilities held for trading.
described in Note 42 - financial assets and liabilities held for trading.
As at 31 December 2021 and 2020, fair value hedging operations may be analyzed as follows:
As at 31 December 2021 and 2020, fair value hedging operations may be analysed as follows:
The Group calculates the “Credit Valuation Adjustment” (CVA) for derivative instruments in accordance
with the methodology described in Note 42 - financial assets and liabilities held for trading.
As at 31 December 2021 and 2020, fair value hedging operations may be analysed as follows:
Derivative
Derivative
Hedged item
Hedged item
Hedged risk
Hedged risk
Notional
Notional
31.12.2021
31.12.2021
(in thousands of Euros)
(in thousands of Euros)
Fair value of
derivatives (2)
Fair value of
derivatives (2)
Change in
fair value of
Change in
derivative in
fair value of
period
derivative in
period
Fair value
component of
Fair value
item hedged (2)
component of
item hedged (2)
Change in fair
value
Change in fair
component of
value
item hedged in
component of
exercise (2)
item hedged in
exercise (2)
Interest Rate Swap
Interest Rate Swap/ CIRS
Interest Rate Swap
Interest Rate Swap/ CIRS
Securities at amortized cost
Loans to customers
Securities at amortized cost
Loans to customers
(1) Attributable to hedged risk
(1) Attributable to hedged risk
(2) Includes accrued interest
(2) Includes accrued interest
Interest rate
Interest and exchange rates
Interest rate
Interest and exchange rates
378 000
2 473 019
378 000
2 473 019
2 851 019
2 851 019
4 184
( 29 005)
4 184
( 29 005)
( 24 821)
( 24 821)
3 675
31 118
3 675
31 118
34 793
34 793
( 3 136)
33 797
( 3 136)
33 797
30 661
30 661
( 4 265)
( 28 935)
( 4 265)
( 28 935)
( 33 200)
( 33 200)
Derivative
Derivative
Hedged item
Hedged item
Hedged risk
Hedged risk
Notional
Notional
31.12.2020
31.12.2020
(in thousands of Euros)
(in thousands of Euros)
Fair value of
derivatives (2)
Fair value of
derivatives (2)
Change in
fair value of
Change in
derivative in
fair value of
period
derivative in
period
Fair value
component of
Fair value
item hedged (2)
component of
item hedged (2)
Change in fair
value
Change in fair
component of
value
item hedged in
component of
exercise (2)
item hedged in
exercise (2)
Interest Rate Swap
Interest Rate Swap/ CIRS
Interest Rate Swap
Interest Rate Swap/ CIRS
Securities at amortized cost
Loans to customers
Securities at amortized cost
Loans to customers
(1) Attributable to hedged risk
(1) Attributable to hedged risk
(2) Includes accrued interest
(2) Includes accrued interest
Interest rate
Interest and exchange rates
Interest rate
Interest and exchange rates
378 000
3 325 224
378 000
3 325 224
3 703 224
3 703 224
665
( 60 236)
665
( 60 236)
( 59 571)
( 59 571)
801
( 9 045)
801
( 9 045)
( 8 244)
( 8 244)
1 129
62 730
1 129
62 730
63 859
63 859
1 130
11 416
1 130
11 416
12 546
12 546
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 65 -
- 66 -
225
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
On 31 December 2021, the ineffective part of the fair value hedging operations, which translated into
a cost of Euro 1.6 million, was recorded in the income statement (31 December 2020: profit of Euro 4.3
million). The Group periodically conducts tests of the effectiveness of existing hedging relationships.
On 31 December 2021, the ineffective part of the fair value hedging operations, which translated into a cost of Euro 1.6 million, was
recorded in the income statement (31 December 2020: profit of Euro 4.3 million). The Group periodically conducts tests of the
effectiveness of existing hedging relationships.
Transactions with risk management and hedge derivatives as of 31 December 2021 and 2020, by
maturity, can be analysed as follows:
On 31 December 2021, the ineffective part of the fair value hedging operations, which translated into a cost of Euro 1.6 million, was
Transactions with risk management and hedge derivatives as of 31 December 2021 and 2020, by maturity, can be analysed as
recorded in the income statement (31 December 2020: profit of Euro 4.3 million). The Group periodically conducts tests of the
follows:
effectiveness of existing hedging relationships.
(in thousands of Euros)
Transactions with risk management and hedge derivatives as of 31 December 2021 and 2020, by maturity, can be analyzed as
follows:
On 31 December 2021, the ineffective part of the fair value hedging operations, which translated into a cost of Euro 1.6 million, was
recorded in the income statement (31 December 2020: profit of Euro 4.3 million). The Group periodically conducts tests of the
65 000
effectiveness of existing hedging relationships.
31.12.2021
76 070
418 161
Transactions with risk management and hedge derivatives as of 31 December 2021 and 2020, by maturity, can be analyzed as
Sell
866 279
follows:
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
Fair Value
(net)
(in thousands of Euros)
( 705)
( 1 212)
Fair Value
1 171
(net)
( 24 075)
65 000
76 070
418 161
Buy
866 278
-
170 866
803 084
877 662
-
170 866
803 084
877 662
-
( 912)
( 8 747)
( 49 912)
Fair Value
(net)
Fair Value
(net)
31.12.2020
Notional
Notional
Notional
Notional
Buy
Sell
Buy
Buy
Sell
Sell
31.12.2021
31.12.2020
( 705)
( 1 212)
1 171
NOTE 26 – INVESTMENTS IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
( 24 075)
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
65 000
76 070
418 161
866 279
65 000
76 070
418 161
866 278
1 425 510
31.12.2021
Fair Value
(net)
1 425 509
( 24 821)
Notional
Buy
Sell
1 851 612
( 59 571)
(in thousands of Euros)
1 851 612
-
170 866
31.12.2020
803 084
Notional
877 662
-
170 866
803 084
877 662
Sell
Fair Value
(net)
-
( 912)
( 8 747)
( 49 912)
NOTE 26 – INVESTMENTS IN SUBSIDIARIES,
JOINT VENTURES AND ASSOCIATES
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
65 000
1 425 509
76 070
418 161
866 278
Economic interest (b)
Cost of participation
65 000
1 425 510
76 070
418 161
866 279
( 705)
( 1 212)
1 171
( 24 075)
Investments in subsidiaries, joint ventures and associates are presented as follows:
NOTE 26 – INVESTMENTS IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
Gross Book Value
Impairment
Net Book Value
-
170 866
803 084
877 662
(in thousands of Euros)
Profit / (losses) attributable
to the Group
-
( 59 571)
( 912)
( 8 747)
( 49 912)
( 24 821)
1 851 612
1 851 612
31.12.2021
31.12.2020
1 425 509
31.12.2021
31.12.2020
1 425 510
31.12.2021
31.12.2020
( 24 821)
31.12.2021
31.12.2020
1 851 612
31.12.2021
31.12.2020
1 851 612
31.12.2021
31.12.2020
( 59 571)
Buy
-
170 866
803 084
877 662
Investments in subsidiaries, joint ventures and associates are presented as follows:
Investments in subsidiaries, joint ventures and associates are presented as follows:
LOCARENT
21 349
20 607
2 967
2 967
50.00%
50.00%
-
LINEAS - CONCESSÕES DE TRANSPORTES
146 769
146 769
40.00%
40.00%
59 737
60 200
( 26 361)
( 26 570)
EDENRED
4 984
4 984
50.00%
50.00%
2 692
2 102
-
UNICRE a)
NOTE 26 – INVESTMENTS IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
11 497
11 497
27 242
28 983
17.50%
17.50%
-
ESEGUR b)
Others
-
9 634
Cost of participation
14 445
28 572
44.00%
-
13 847
-
Economic interest (b)
11 474
Gross Book Value
19 701
( 8 673)
( 6 717)
Impairment
( 11 393)
Investments in subsidiaries, joint ventures and associates are presented as follows:
94 590
31.12.2021
a) Despite the Group's economic interest being less than 20%, this entity was included in the consolidated balance sheet using the equity method since the Group exercises significant influence over its activities.
194 789
31.12.2020
190 296
31.12.2021
31.12.2020
31.12.2020
31.12.2020
31.12.2021
31.12.2021
136 341
131 593
( 41 751)
( 37 963)
-
-
-
-
21 349
33 376
2 692
20 607
33 630
2 102
27 242
28 983
1 054
( 1 908)
904
3 120
1 021
4 526
469
(in thousands of Euros)
4 242
5 174
4 757
-
Net Book Value
8 308
98
526
-
Profit / (losses) attributable
( 828)
to the Group
31.12.2021
93 630
31.12.2020
3 794
9 430
31.12.2021
31.12.2020
The financial information of the most relevant associated companies is presented in the following table:
31.12.2021
LOCARENT
b) Reclassified during 2021 from discontinued operations (see Note 32)
2 967
2 967
LINEAS - CONCESSÕES DE TRANSPORTES
146 769
146 769
50.00%
40.00%
50.00%
40.00%
21 349
59 737
20 607
60 200
-
-
( 26 361)
( 26 570)
21 349
33 376
50.00%
EDENRED
Economic interest (b)
The financial information of the most relevant associated companies is presented in the following table:
UNICRE a)
17.50%
ESEGUR b)
44.00%
-
31.12.2021
-
Cost of participation
Gross Book Value
31.12.2020
( 8 673)
31.12.2021
-
Impairment
31.12.2020
31.12.2021
31.12.2021
31.12.2020
31.12.2020
31.12.2021
11 497
11 497
27 242
28 983
13 847
-
Net Book Value
4 984
9 634
4 984
2 102
2 692
50.00%
17.50%
27 242
31.12.2020
5 174
2 692
-
-
-
-
20 607
1 054
(in thousands of Euros)
( 1 908)
33 630
Profit / (losses) attributable
904
to the Group
2 102
3 120
28 983
31.12.2021
-
1 021
4 526
469
4 242
Others
LOCARENT
2 967
14 445
50.00%
50.00%
21 349
11 474
20 607
19 701
-
( 6 717)
-
( 11 393)
21 349
4 757
20 607
8 308
1 054
EDENRED
LINEAS - CONCESSÕES DE TRANSPORTES
33 630
94 590
31.12.2020
2 102
a) Despite the Group's economic interest being less than 20%, this entity was included in the consolidated balance sheet using the equity method since the Group exercises significant influence over its activities.
28 983
190 296
31.12.2021
4 984
11 497
b) Reclassified during 2021 from discontinued operations (see Note 32)
9 634
59 737
31.12.2020
2 692
27 242
238 299
13 847
40.00%
31.12.2021
50.00%
17.50%
229 358
42 082
-
( 8 673)
40 593
-
UNICRE a)
LOCARENT
ESEGUR b)
131 593
31.12.2021
2 102
( 41 751)
31.12.2020
27 242
28 253
5 174
( 37 963)
31.12.2021
278 892
-
44.00%
194 789
4 984
271 440
31.12.2020
136 341
146 769
( 26 570)
( 26 361)
28 983
33 376
11 497
60 200
2 692
40.00%
17.50%
50.00%
-
-
-
-
-
Liabilities
Equity
Income
28 572
2 967
Assets
146 769
31.12.2020
98
(in thousands of Euros)
526
1 021
( 828)
-
Profit / (loss) for the period
93 630
( 1 908)
31.12.2021
3 120
904
4 526
3 794
469
4 242
9 430
31.12.2020
33 115
-
2 108
98
2 042
-
Others
LINEAS - CONCESSÕES DE TRANSPORTES
8 308
19 769
7 083
The financial information of the most relevant associated companies is presented in the following table:
148 490
EDENRED
11 175
94 590
a) Despite the Group's economic interest being less than 20%, this entity was included in the consolidated balance sheet using the equity method since the Group exercises significant influence over its activities.
UNICRE a)
142 625
b) Reclassified during 2021 from discontinued operations (see Note 32)
ESEGUR b)
11 474
154 744
138 557
226 769
376 148
220 481
155 667
210 647
165 619
239 341
376 266
88 212
84 597
78 399
72 897
67 973
11 605
10 426
84 502
4 757
1 503
136 341
131 593
194 789
190 296
( 11 393)
( 41 751)
( 37 963)
28 572
14 445
19 701
93 630
( 6 717)
13 007
15 916
39 947
28 923
-
-
-
Assets
Liabilities
Equity
526
( 4 770)
( 828)
3 794
1 807
9 430
12 333
938
17 827
24 239
(in thousands of Euros)
220
-
Profit / (loss) for the period
-
Income
Note: Data adjusted for consolidation purposes
The financial information of the most relevant associated companies is presented in the following table:
a) Despite the Group's economic interest being less than 20%, this entity was included in the consolidated balance sheet using the equity method since the Group exercises significant influence over its
activities.
LOCARENT
(in thousands of Euros)
238 299
271 440
278 892
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2021
31.12.2020
40 593
28 253
2 108
31.12.2020
LINEAS - CONCESSÕES DE TRANSPORTES
b) Reclassified during 2021 from discontinued operations (see Note 32)
226 769
239 341
Assets
EDENRED
33 115
LOCARENT
UNICRE a)
The changes in this caption for the years ended as at 31 December 2021 and 2020, are analysed as follows:
LINEAS - CONCESSÕES DE TRANSPORTES
19 769
ESEGUR b)
EDENRED
-
11 175
376 148
155 667
220 481
210 647
165 619
142 625
376 266
72 897
67 973
11 605
10 426
11 175
13 007
15 916
39 947
78 399
28 923
84 502
226 769
138 557
239 341
154 744
271 440
229 358
278 892
238 299
84 502
28 253
88 212
84 597
72 897
11 605
67 973
78 399
10 426
42 082
40 593
1 503
7 083
-
-
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
Note: Data adjusted for consolidation purposes
UNICRE a)
376 148
376 266
220 481
210 647
155 667
165 619
142 625
31.12.2021
148 490
229 358
Liabilities
138 557
154 744
84 597
42 082
Equity
88 212
Income
1 503
31.12.2020
33 115
Profit / (loss) for the period
19 769
( 4 770)
31.12.2020
1 807
31.12.2021
7 083
2 042
12 333
938
148 490
2 108
17 827
2 042
24 239
(in thousands of Euros)
12 333
220
( 4 770)
-
1 807
31.12.2020
220
17 827
938
24 239
-
(in thousands of Euros)
(a) In the year 2021 includes EUR 4,326 thousand related to the reclassification of Ijar Leasing to discontinued operations and EUR 5,232 thousand and EUR 669 thousand
ESEGUR b)
a) Despite the Group's economic interest being less than 20%, this entity was included in the consolidated balance sheet using the equity method since the Group exercises significant influence over its
-
activities.
13 007
15 916
a) Despite the Group's economic interest being less than 20%, this entity was included in the consolidated balance sheet using the equity method since the Group exercises significant influence over its
activities.
-
-
39 947
28 923
Note: Data adjusted for consolidation purposes
b) Reclassified during 2021 from discontinued operations (see Note 32)
b) Reclassified during 2021 from discontinued operations (see Note 32)
Balance at the beginning of the exercise
The changes in this caption for the years ended as at 31 December 2021 and 2020, are analysed as follows:
-
93 630
( 153)
-
3 794
315
The changes in this caption for the years ended as at 31 December 2021 and 2020, are analysed as follows:
( 774)
31.12.2021
( 7 499)
5 277
Disposals and other reimbursements (see Note 1)
Additional acquisitions and investments (see Note 1)
Share of profits / (losses) of associated companies
Impairment in associated companies
Fair value reserves of investments in associated companies
Dividends received
Balance at the beginning of the exercise
Foreign exchange differences and other (a)
Disposals and other reimbursements (see Note 1)
Additional acquisitions and investments (see Note 1)
Disposals and other reimbursements (see Note 1)
Share of profits / (losses) of associated companies
Additional acquisitions and investments (see Note 1)
Balance at the end of the exercise
Balance at the beginning of the exercise
93 630
( 153)
-
3 794
94 590
93 630
( 153)
-
31.12.2021
-
92 628
-
2 919
9 430
( 4 192)
691
31.12.2020
( 1 541)
( 6 305)
92 628
-
2 919
9 430
93 630
92 628
-
2 919
related to the reclassification of ESEGUR and Multipessoal, respectively, from discontinued operations (see Note 32)
Impairment in associated companies
Share of profits / (losses) of associated companies
Fair value reserves of investments in associated companies
Impairment in associated companies
Dividends received
Fair value reserves of investments in associated companies
Foreign exchange differences and other (a)
Dividends received
Foreign exchange differences and other (a)
Balance at the end of the exercise
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3 794
315
315
( 774)
( 774)
( 7 499)
( 7 499)
5 277
5 277
94 590
9 430
( 4 192)
691
( 1 541)
( 6 305)
( 4 192)
691
( 1 541)
( 6 305)
93 630
- 67 -
93 630
Balance at the end of the exercise
(a) In the year 2021 includes EUR 4,326 thousand related to the reclassification of Ijar Leasing to discontinued operations and EUR 5,232 thousand and EUR 669 thousand
94 590
related to the reclassification of ESEGUR and Multipessoal, respectively, from discontinued operations (see Note 32)
(a) In the year 2021 includes EUR 4,326 thousand related to the reclassification of Ijar Leasing to discontinued operations and EUR 5,232 thousand and EUR 669 thousand
related to the reclassification of ESEGUR and Multipessoal, respectively, from discontinued operations (see Note 32)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 66 -
- 66 -
(in thousands of Euros)
31.12.2020
226
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
On 31 December 2021, the ineffective part of the fair value hedging operations, which translated into a cost of Euro 1.6 million, was
recorded in the income statement (31 December 2020: profit of Euro 4.3 million). The Group periodically conducts tests of the
effectiveness of existing hedging relationships.
Transactions with risk management and hedge derivatives as of 31 December 2021 and 2020, by maturity, can be analysed as
follows:
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
(in thousands of Euros)
31.12.2021
31.12.2020
Notional
Buy
Sell
Fair Value
(net)
Notional
Buy
Sell
Fair Value
(net)
65 000
76 070
418 161
866 278
65 000
76 070
418 161
866 279
( 705)
( 1 212)
1 171
( 24 075)
-
170 866
803 084
877 662
-
170 866
803 084
877 662
1 425 509
1 425 510
( 24 821)
1 851 612
1 851 612
-
( 912)
( 8 747)
( 49 912)
( 59 571)
NOTE 26 – INVESTMENTS IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
Investments in subsidiaries, joint ventures and associates are presented as follows:
LINEAS - CONCESSÕES DE TRANSPORTES
146 769
146 769
( 26 361)
( 26 570)
Cost of participation
Economic interest (b)
Gross Book Value
Impairment
Net Book Value
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2020
2 967
2 967
4 984
4 984
11 497
11 497
9 634
-
14 445
28 572
190 296
194 789
50.00%
40.00%
50.00%
17.50%
44.00%
50.00%
40.00%
50.00%
17.50%
-
21 349
59 737
2 692
27 242
13 847
11 474
20 607
60 200
2 102
28 983
-
19 701
-
-
-
-
-
-
-
21 349
33 376
2 692
20 607
33 630
2 102
27 242
28 983
5 174
4 757
-
8 308
1 054
( 1 908)
904
3 120
98
526
1 021
4 526
469
4 242
-
( 828)
( 8 673)
( 6 717)
( 11 393)
136 341
131 593
( 41 751)
( 37 963)
94 590
93 630
3 794
9 430
(in thousands of Euros)
Profit / (losses) attributable
to the Group
LOCARENT
EDENRED
UNICRE a)
ESEGUR b)
Others
a) Despite the Group's economic interest being less than 20%, this entity was included in the consolidated balance sheet using the equity method since the Group exercises significant influence over its activities.
b) Reclassified during 2021 from discontinued operations (see Note 32)
The financial information of the most relevant associated companies is presented in the following table:
Assets
Liabilities
Equity
Income
Profit / (loss) for the period
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2020
(in thousands of Euros)
LOCARENT
271 440
278 892
229 358
238 299
LINEAS - CONCESSÕES DE TRANSPORTES
226 769
239 341
138 557
154 744
84 502
78 399
72 897
67 973
42 082
88 212
11 605
40 593
84 597
10 426
28 253
1 503
11 175
33 115
19 769
7 083
2 108
( 4 770)
1 807
2 042
12 333
938
376 148
376 266
220 481
210 647
155 667
165 619
142 625
148 490
17 827
24 239
28 923
-
13 007
-
15 916
-
39 947
-
220
-
EDENRED
UNICRE a)
ESEGUR b)
Note: Data adjusted for consolidation purposes
a) Despite the Group's economic interest being less than 20%, this entity was included in the consolidated balance sheet using the equity method since the Group exercises significant influence over its
activities.
b) Reclassified during 2021 from discontinued operations (see Note 32)
The changes in this caption for the years ended as at 31 December 2021 and 2020, are analysed as
follows:
The changes in this caption for the years ended as at 31 December 2021 and 2020, are analysed as follows:
(in thousands of Euros)
Balance at the beginning of the exercise
Disposals and other reimbursements (see Note 1)
Additional acquisitions and investments (see Note 1)
Share of profits / (losses) of associated companies
Impairment in associated companies
Fair value reserves of investments in associated companies
Dividends received
Foreign exchange differences and other (a)
Balance at the end of the exercise
31.12.2021
31.12.2020
93 630
( 153)
-
3 794
315
( 774)
( 7 499)
5 277
94 590
92 628
-
2 919
9 430
( 4 192)
691
( 1 541)
( 6 305)
93 630
(a) In the year 2021 includes EUR 4,326 thousand related to the reclassification of Ijar Leasing to discontinued operations and EUR 5,232 thousand and EUR 669 thousand
related to the reclassification of ESEGUR and Multipessoal, respectively, from discontinued operations (see Note 32)
In 2021, dividend income of Euro 7,499 thousand was recorded in financial assets in investments in associates and subsidiaries,
which include dividends received from Unicre in the amount of Euro 6,321 thousand, from Edenred in the amount of Euro 660
thousand (31 December 2020: Euro 1,541 thousand, which include dividends received from Locarent in the amount of Euro 958
In 2021, dividend income of Euro 7,499 thousand was recorded in financial assets in investments in
thousand and Edenred in the amount of Euro 583 thousand).
associates and subsidiaries, which include dividends received from Unicre in the amount of Euro 6,321
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
thousand, from Edenred in the amount of Euro 660 thousand (31 December 2020: Euro 1,541 thousand,
- 67 -
which include dividends received from Locarent in the amount of Euro 958 thousand and Edenred in
the amount of Euro 583 thousand).
The changes in impairment losses for investments in associates are presented as follows:
The changes in impairment losses for investments in associates are presented as follows:
(in thousands of Euros)
31.12.2021
31.12.2020
Balance at the beginning of the year
Charges
Uses
Reversals
Foreign exchange differences (a)
37 963
678
-
( 993)
4 103
Balance at the end of the year
(a) For 2021 it includes Euro 4,725 thousand impairment for Ijar Leasing transferred during the first half of 2021 to discontinued operations (see Note 32).
41 751
NOTE 27 – PROPERTY, PLANT AND EQUIPMENT
This caption as at 31 December 2021 and 31 December 2020 is analysed as follows:
36 317
5 142
( 2 680)
( 950)
134
37 963
NOTE 27 – PROPERTY, PLANT AND EQUIPMENT
Real estate properties
This caption as at 31 December 2021 and 31 December 2020 is analysed as follows:
For own use
Improvement in leasehold properties
Equipment
Computer equipment
Fixtures
Furniture
Security equipment
Transport equipment
Right of use assets
Other
Assets under right of use
Real estate properties
Equipment
Work in progress
Improvements in leasehold properties
Real estate properties
Equipment
Others
Accumulated impairment
Accumulated depreciation
(in thousands of Euros)
31.12.2021
31.12.2020
245 988
120 800
225 571
135 909
366 788
361 480
114 847
49 276
54 728
21 775
8 407
583
146
106 337
56 936
52 296
24 248
7 993
583
189
249 762
248 582
55 993
9 819
53 082
10 228
65 812
63 310
952
9 891
6
336
11 185
-
148
1
1 417
1 566
693 547
674 938
( 13 221)
( 441 381)
( 13 943)
( 473 943)
238 945
187 052
227
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 67 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
In 2021, dividend income of Euro 7,499 thousand was recorded in financial assets in investments in associates and subsidiaries,
which include dividends received from Unicre in the amount of Euro 6,321 thousand, from Edenred in the amount of Euro 660
thousand (31 December 2020: Euro 1,541 thousand, which include dividends received from Locarent in the amount of Euro 958
thousand and Edenred in the amount of Euro 583 thousand).
The changes in impairment losses for investments in associates are presented as follows:
(in thousands of Euros)
31.12.2021
31.12.2020
Balance at the beginning of the year
Charges
Uses
Reversals
Foreign exchange differences (a)
37 963
678
-
( 993)
4 103
Balance at the end of the year
(a) For 2021 it includes Euro 4,725 thousand impairment for Ijar Leasing transferred during the first half of 2021 to discontinued operations (see Note 32).
41 751
NOTE 27 – PROPERTY, PLANT AND EQUIPMENT
This caption as at 31 December 2021 and 31 December 2020 is analysed as follows:
36 317
5 142
( 2 680)
( 950)
134
37 963
Real estate properties
For own use
Improvement in leasehold properties
Equipment
Computer equipment
Fixtures
Furniture
Security equipment
Transport equipment
Right of use assets
Other
Assets under right of use
Real estate properties
Equipment
Work in progress
Improvements in leasehold properties
Real estate properties
Equipment
Others
Accumulated impairment
Accumulated depreciation
(in thousands of Euros)
31.12.2021
31.12.2020
245 988
120 800
225 571
135 909
366 788
361 480
114 847
49 276
54 728
21 775
8 407
583
146
106 337
56 936
52 296
24 248
7 993
583
189
249 762
248 582
55 993
9 819
53 082
10 228
65 812
63 310
952
9 891
6
336
11 185
-
148
1
1 417
1 566
693 547
674 938
( 13 221)
( 441 381)
( 13 943)
( 473 943)
238 945
187 052
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 67 -
228
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The changes in this caption were as follows:
The changes in this caption were as follows:
-
-
-
-
(in thousand of Euros)
Real Estate
Properties
Equipment
Right of Use
Assets
Work in
Progress
Total
Acquisition Cost
Balance at 31 December 2019
Acquisitions
Disposals/write-offs
Transfers
Foreign exchange differences and other (a)
Balance at 31 December 2020
Acquisitions
Disposals/write-offs
Transfers (d)
Foreign exchange differences and other
346 810
31 178
( 5 090)
( 1 665)
( 9 753)
361 480
37 989
( 37 561)
4 881
( 1)
274 569
11 238
( 10 360)
( 147)
( 26 718)
248 582
24 853
( 23 835)
160
2
66 483
4 276
( 7 449)
-
-
63 310
2 502
-
-
-
Balance at 31 December 2021
366 788
249 762
65 812
Depreciation
Balance at 31 December 2019
Depreciation
Disposals/write-offs
Transfers (b)
Foreign exchange differences and other (c)
Balance at 31 December 2020
Depreciation
Disposals/write-offs
Transfers (d)
Foreign exchange differences and other
228 222
4 881
( 3 103)
( 805)
( 995)
228 200
5 391
( 31 068)
( 1 512)
3 101
245 967
9 624
( 9 980)
( 143)
( 24 431)
221 037
10 668
( 23 200)
( 284)
171
14 751
15 780
( 5 825)
-
-
24 706
11 400
( 7 229)
-
Balance at 31 December 2021
204 112
208 392
28 877
Impairment
Balance at 31 December 2019
Impairment loss
Balance at 31 December 2020
Impairment losses
Reversal of impairment losses
Transfers
Exchange variation and other movements
Balance at 31 December 2021
Net book value at 31 December 2021
10 609
3 334
13 943
3 484
( 5 167)
303
658
13 221
149 455
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
95
1 593
-
( 121)
( 1)
1 566
16 629
-
( 7 010)
-
11 185
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
687 957
48 285
( 22 899)
( 1 933)
( 36 472)
674 938
81 973
( 61 396)
( 1 969)
1
693 547
488 940
30 285
( 18 908)
( 948)
( 25 426)
473 943
27 459
( 61 497)
( 1 796)
3 272
441 381
10 609
3 334
13 943
3 484
( 5 167)
303
658
13 221
238 945
41 370
36 935
11 185
Net book value at 31 December 2020
119 337
27 545
38 604
1 566
187 052
(a) Includes Euro 9,005 and Euro 27,118 thousand of real estate and equipment of the Spain branch transferred for discontinued activities during 2020.
(b) Includes Euro 1,951 thousand of fixed assets (property and equipment) and Euro 1,064 thousand of accumulated depreciation relating to discontinued branches that were transferred at net value to the
appropriate balance sheet items.
(c) Includes Euro 2,034 and Euro 24,274 thousand of depreciation relating to real estate and equipment of the Spanish Branch transferred for discontinued activities during 2020.
(d) Includes Euro 3,471 thousand of fixed assets (property and equipment) and Euro 1,650 thousand of accumulated depreciation related to discontinued branches that were transferred at net value to the
appropriate balance sheet items.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 69 -
229
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 28 – INVESTMENT PROPERTIES
NOTE 28 – INVESTMENT PROPERTIES
The changes in Investment properties is presented as follows:
NOTE 28 – INVESTMENT PROPERTIES
The changes in Investment properties is presented as follows:
The changes in Investment properties is presented as follows:
Balance at the beginning of the exercise
Acquisitions
Disposals
Changes in fair value
Other (a)
Balance at the beginning of the exercise
Acquisitions
Balance at the end of the exercise
Disposals
(a) Includes EUR 37,609 thousand in 2021 and EUR 52,915 thousand in 2020 of real estate assets, previously classified in Other Assets, transferred under the Real Estate Funds reorganization process
Changes in fair value
(see Note 31)
Other (a)
700 744
11 966
( 67 581)
( 101 827)
49 303
700 744
11 966
592 605
( 67 581)
( 101 827)
49 303
592 605
4 973
( 49 727)
31 179
46 157
592 605
4 973
625 187
( 49 727)
31 179
46 157
(in thousands of Euros)
31.12.2020
31.12.2021
(in thousands of Euros)
31.12.2021
31.12.2020
Balance at the end of the exercise
According to the accounting policy described in Note 7.19, the book value of investment properties
is the fair value of the properties, as determined by a registered and independent appraiser with a
recognized professional qualification and experience in the geographical location and category of
the property being valued. For the purposes of determining the fair value of these assets, generally
accepted criteria and methodologies are used, which integrate analyses by the income method and
the market method, corresponding to level 3 of the fair value hierarchy (see Note 42). In view of the
uncertainty associated with the estimated value of these assets, novobanco Group considers the
impacts of the current context of the Covid-19 pandemic as the assets are subject to revaluation.
According to the accounting policy described in Note 7.19, the book value of investment properties is the fair value of the properties,
as determined by a registered and independent appraiser with a recognized professional qualification and experience in the
(a) Includes EUR 37,609 thousand in 2021 and EUR 52,915 thousand in 2020 of real estate assets, previously classified in Other Assets, transferred under the Real Estate Funds reorganization process
geographical location and category of the property being valued. For the purposes of determining the fair value of these assets,
(see Note 31)
generally accepted criteria and methodologies are used, which integrate analyses by the income method and the market method,
corresponding to level 3 of the fair value hierarchy (see Note 42). In view of the uncertainty associated with the estimated value of
According to the accounting policy described in Note 7.19, the book value of investment properties is the fair value of the properties,
these assets, novobanco Group considers the impacts of the current context of the Covid-19 pandemic as the assets are subject to
as determined by a registered and independent appraiser with a recognized professional qualification and experience in the
revaluation.
geographical location and category of the property being valued. For the purposes of determining the fair value of these assets,
generally accepted criteria and methodologies are used, which integrate analyses by the income method and the market method,
Investment properties comprise some assets held by Funds and Real Estate firms, and include commercial properties leased for
corresponding to level 3 of the fair value hierarchy (see Note 42). In view of the uncertainty associated with the estimated value of
revenue and properties held for valuation. Most of the lease contracts have no specific tenor, enabling the lessee to cancel it at any
these assets, novobanco Group considers the impacts of the current context of the Covid-19 pandemic as the assets are subject to
time. However, for a small number of these commercial properties leased to third parties there is a non-cancelling clause for
revaluation.
approximately 10 years. Subsequent leases are negotiated with the lessee.
Investment properties comprise some assets held by Funds and Real Estate firms, and include commercial properties leased for
During 2021, the increase in the fair value of investment properties in the amount of Euro 31.2 million (31 December 2020: reduction
revenue and properties held for valuation. Most of the lease contracts have no specific tenor, enabling the lessee to cancel it at any
of Euro 101.8 million) (see Note 15), and the rental income from investment properties in the amount of Euro 19.2 million (31
time. However, for a small number of these commercial properties leased to third parties there is a non-cancelling clause for
December 2020: Euro 19.3 million), are recognized under Other operating income and expenses.
approximately 10 years. Subsequent leases are negotiated with the lessee.
NOTE 29 – INTANGIBLE ASSETS
592 605
625 187
Investment properties comprise some assets held by Funds and Real Estate firms, and include
commercial properties leased for revenue and properties held for valuation. Most of the lease contracts
have no specific tenor, enabling the lessee to cancel it at any time. However, for a small number of
these commercial properties leased to third parties there is a non-cancelling clause for approximately
10 years. Subsequent leases are negotiated with the lessee.
During 2021, the increase in the fair value of investment properties in the amount of Euro 31.2 million (31 December 2020: reduction
NOTE 29 – INTANGIBLE ASSETS
of Euro 101.8 million) (see Note 15), and the rental income from investment properties in the amount of Euro 19.2 million (31
December 2020: Euro 19.3 million), are recognized under Other operating income and expenses.
This caption as at 31 December 2021 and 31 December 2020, is analysed as follows:
NOTE 29 – INTANGIBLE ASSETS
During 2021, the increase in the fair value of investment properties in the amount of Euro 31.2 million (31
December 2020: reduction of Euro 101.8 million) (see Note 15), and the rental income from investment
properties in the amount of Euro 19.2 million (31 December 2020: Euro 19.3 million), are recognized
under Other operating income and expenses.
This caption as at 31 December 2021 and 31 December 2020, is analysed as follows:
This caption as at 31 December 2021 and 31 December 2020, is analysed as follows:
Goodwill
Impairment losses
Internally developed
Goodwill
Software - Automatic data processing system
Other
Impairment losses
Acquired from third parties
Internally developed
Software - Automatic data processing system
Software - Automatic data processing system
Other
Work in progress
Acquired from third parties
Software - Automatic data processing system
Accumulated amortization
Work in progress
Accumulated amortization
(in thousands of Euros)
31.12.2021
31.12.2020
13 907
13 907
(in thousands of Euros)
( 13 907)
31.12.2021
-
( 13 907)
31.12.2020
-
13 907
69 511
( 13 907)
1
-
387 358
69 511
456 870
1
13 455
13 907
69 511
( 13 907)
1
-
353 678
69 511
423 190
1
21 439
470 325
387 358
444 629
353 678
( 402 339)
456 870
67 986
13 455
( 395 796)
423 190
48 833
21 439
470 325
444 629
( 402 339)
( 395 796)
67 986
48 833
230
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 70 -
- 70 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The changes in this caption were as follows:
The changes in this caption were as follows:
Acquisition cost
Balance as at 31 December 2019
Acquisitions
Acquired from third parties
Disposals / write-offs
Transfers
Foreign exchange differences and other (a)
Saldo a 31 de dezembro de 2020
Acquisitions
Acquired from third parties
Transfers
Balance as at 31 December 2021
Amortizations
Balance as at 31 December 2019
Amortization for the period
Disposals / write-offs
Foreign exchange differences and other
Balance as at 31 December 2020
Amortization for the period
Foreign exchange differences and other (b)
Balance as at 31 December 2021
Impairment
Balance as at 31 December 2019
Foreign exchange differences and other
Balance as at 31 December 2020
Balance as at 31 December 2021
Net balance at 31 December 2021
Net balance at 31 December 2020
Goodwill
Software
Work in progress
Total
(in thousands of Euros)
13 908
440 946
17 464
472 318
-
-
-
( 1)
13 907
-
-
13 907
-
-
-
-
-
-
-
-
13 908
( 1)
13 907
13 907
-
-
2 730
( 24)
20 161
( 40 623)
423 190
3 499
30 181
456 870
432 032
2 787
( 20)
( 39 003)
395 796
6 545
( 2)
402 339
-
-
-
-
24 136
-
( 20 161)
-
21 439
22 197
( 30 181)
13 455
-
-
-
-
-
-
-
-
-
-
-
-
54 531
27 394
13 455
21 439
26 866
( 24)
-
( 40 624)
458 536
25 696
-
484 232
432 032
2 787
( 20)
( 39 003)
395 796
6 545
( 2)
402 339
13 908
( 1)
13 907
13 907
67 986
48 833
(a) Includes Euro 40,083 thousand of projects assigned to the Spain branch transferred to Discontinued Entities during the financial year 2020.
(b) Includes Euro 38,463 thousand of investment projects related to the Spanish Branch transferred to Discontinued Entities during the financial year 2020.
Goodwill is recognized in accordance with the accounting policy described in Note 6and can be analyzed as follows:
Subsidiaries
Imbassaí
GNB Concessões
Impairment losses
Imbassaí
GNB Concessões
(in thousands of Euros)
31.12.2021
31.12.2020
13 526
381
13 907
(13 526)
( 381)
(13 907)
-
13 526
381
13 907
(13 526)
( 381)
(13 907)
-
231
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 70 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The changes in this caption were as follows:
Foreign exchange differences and other (a)
Acquisition cost
Balance as at 31 December 2019
Acquisitions
Acquired from third parties
Disposals / write-offs
Transfers
Saldo a 31 de dezembro de 2020
Acquisitions
Transfers
Acquired from third parties
Balance as at 31 December 2021
Amortizations
Balance as at 31 December 2019
Amortization for the period
Disposals / write-offs
Foreign exchange differences and other
Balance as at 31 December 2020
Amortization for the period
Foreign exchange differences and other (b)
Balance as at 31 December 2021
Impairment
Balance as at 31 December 2019
Foreign exchange differences and other
Balance as at 31 December 2020
Balance as at 31 December 2021
Net balance at 31 December 2021
Net balance at 31 December 2020
Goodwill
Software
Work in progress
Total
(in thousands of Euros)
13 908
440 946
( 1)
13 907
13 907
-
-
-
-
-
-
-
-
-
-
-
-
-
13 908
( 1)
13 907
13 907
-
-
2 730
( 24)
20 161
( 40 623)
423 190
3 499
30 181
456 870
432 032
2 787
( 20)
( 39 003)
395 796
6 545
( 2)
402 339
-
-
-
-
17 464
24 136
( 20 161)
21 439
22 197
( 30 181)
13 455
-
-
-
-
-
-
-
-
-
-
-
-
-
-
54 531
27 394
13 455
21 439
472 318
26 866
( 24)
( 40 624)
458 536
25 696
-
-
484 232
432 032
2 787
( 20)
( 39 003)
395 796
6 545
( 2)
402 339
13 908
( 1)
13 907
13 907
67 986
48 833
(a) Includes Euro 40,083 thousand of projects assigned to the Spain branch transferred to Discontinued Entities during the financial year 2020.
(b) Includes Euro 38,463 thousand of investment projects related to the Spanish Branch transferred to Discontinued Entities during the financial year 2020.
Goodwill is recognized in accordance with the accounting policy described in Note 6and can be analyzed as follows:
Goodwill is recognized in accordance with the accounting policy described in Note 6and can be analyzed as follows:
Subsidiaries
Imbassaí
GNB Concessões
Impairment losses
Imbassaí
GNB Concessões
(in thousands of Euros)
31.12.2021
31.12.2020
13 526
381
13 907
(13 526)
( 381)
(13 907)
-
13 526
381
13 907
(13 526)
( 381)
(13 907)
-
NOTE 30 – INCOME TAXES
NOTE 30 – INCOME TAXES
Tax assets and liabilities recognized in the balance sheet as at 31 December 2021 and 2020 can be
analysed as follows:
Tax assets and liabilities recognized in the balance sheet as at 31 December 2021 and 2020 can be analysed as follows:
NOTE 30 – INCOME TAXES
(in thousands of Euros)
31.12.2020
Tax assets and liabilities recognized in the balance sheet as at 31 December 2021 and 2020 can be analysed as follows:
31.12.2021
Liabilities
Assets
Assets
Liabilities
The deferred tax assets and liabilities recognized in the balance sheet as at 31 December 2021 and
2020 are as follows:
Current tax
Corporate Tax recoverable / (payable)
Other
Deferred tax
Current tax
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Corporate Tax recoverable / (payable)
Other
Deferred tax
31.12.2021
Liabilities
35 653
142
35 511
Assets
744 239
35 653
779 892
142
35 511
744 239
12 262
12 162
100
3 035
12 262
15 297
12 162
100
3 035
610
144
466
Assets
774 888
610
775 498
144
466
774 888
775 498
(in thousands of Euros)
31.12.2020
Liabilities
- 70 -
9 203
9 129
74
5 121
9 203
14 324
9 129
74
5 121
14 324
Assets
779 892
15 297
Liabilities
(in thousands of Euros)
Net
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2020
The deferred tax assets and liabilities recognized in the balance sheet as at 31 December 2021 and 2020 are as follows:
The deferred tax assets and liabilities recognized in the balance sheet as at 31 December 2021 and 2020 are as follows:
Financial instruments
Impairment losses on loans (not covered)
Impairment losses on loans (covered)
Other tangible assets
Provisions
Financial instruments
Pensions
Impairment losses on loans (not covered)
Long-term service bonuses
Impairment losses on loans (covered)
Other
Other tangible assets
Tax losses carried forward
Provisions
Deferred tax asset / (liability)
Pensions
Asset / liability set-off for deferred tax purposes
Long-term service bonuses
Other
Net Deferred tax asset / (liability)
Tax losses carried forward
92 300
339 022
267 341
Assets
-
31.12.2021
82 240
92 300
48 995
339 022
21
267 341
124
-
751
82 240
830 794
48 995
( 86 555)
21
124
744 239
751
( 138 855)
-
-
( 8 203)
31.12.2020
-
( 138 855)
-
-
-
-
( 9 989)
( 8 203)
-
-
( 157 047)
-
151 926
-
( 9 989)
( 5 121)
-
( 78 526)
-
-
( 8 029)
31.12.2021
-
( 78 526)
-
-
-
-
( 3 035)
( 8 029)
-
-
( 89 590)
-
86 555
-
( 3 035)
( 3 035)
-
64 322
790 784
-
-
31.12.2020
39 136
64 322
31 676
790 784
22
-
123
-
751
39 136
926 814
31 676
( 151 926)
22
123
774 888
751
13 774
339 022
267 341
( 8 029)
31.12.2021
82 240
13 774
48 995
339 022
21
267 341
( 2 911)
( 8 029)
751
82 240
741 204
48 995
-
21
( 2 911)
741 204
751
Liabilities
Net
( 74 533)
790 784
-
( 8 203)
31.12.2020
39 136
( 74 533)
31 676
790 784
22
-
( 9 866)
( 8 203)
751
39 136
769 767
31 676
-
22
( 9 866)
769 767
751
(in thousands of Euros)
Deferred tax asset / (liability)
As of 31 December 2021 the deferred tax related to temporary differences was determined based on an aggregate rate of 31%,
Asset / liability set-off for deferred tax purposes
resulting from the sum of the general IRC rate (21%), the Municipal Surcharge of 1.5% and an average rate of State Surcharge of
Net Deferred tax asset / (liability)
8.5%.
( 151 926)
( 157 047)
830 794
926 814
741 204
769 767
744 239
151 926
741 204
774 888
769 767
( 86 555)
( 89 590)
86 555
( 3 035)
( 5 121)
-
-
232
On 4th September 2019, Law No. 98/2019 was published, which amended the IRC Code on the tax treatment of credit institutions'
As of 31 December 2021, the deferred tax related to temporary differences was determined based on an aggregate rate of 31%,
impairments, creating rules applicable to impairment losses recorded in the tax periods beginning before 1st January 2019, not yet
resulting from the sum of the general IRC rate (21%), the Municipal Surcharge of 1.5% and an average rate of State Surcharge of
accepted for tax purposes. This Law established a transition period for the aforementioned tax regime, which allows taxpayers in the
8.5%.
five tax periods beginning on or after January 1, 2019, to continue to apply the tax regime in force before publication of this law,
On 4th September 2019, Law No. 98/2019 was published, which amended the IRC Code on the tax treatment of credit institutions'
except if they perform the exercise of opt in until the end of October of each tax period of the adaptation regime. Therefore, on
impairments, creating rules applicable to impairment losses recorded in the tax periods beginning before 1 st January 2019, not yet
December 31, 2021, the Group continued to apply Regulatory Decree no. 13/2018, of December 28, which aims to extend, for tax
purposes, the tax framework that derives from Notice no. 3/95 of the Bank of Portugal.
accepted for tax purposes. This Law established a transition period for the aforementioned tax regime, which allows taxpayers in t he
five tax periods beginning on or after January 1, 2019, to continue to apply the tax regime in force before the publication of this law,
The IRC payment declarations are subject to inspection and possible adjustment by the Tax Authorities for a period of four years or
except if they perform the exercise of opt in until the end of October of each tax period of the adaptation regime. Therefore, on
during the period in which it is possible to deduct tax losses or tax credits (up to a maximum of twelve years, depending on the year
December 31, 2021, the Group continued to apply Regulatory Decree no. 13/2018, of December 28, which aims to extend, for tax
of determination). Thus, possible additional tax assessments may take place due essentially to different interpretations of tax
purposes, the tax framework that derives from Notice no. 3/95 of the Bank of Portugal.
legislation. However, Management believes that, in the context of the consolidated financial statements, there will be no additional
charges of significant value.
The IRC payment declarations are subject to inspection and possible adjustment by the Tax Authorities for a period of four ye ars or
during the period in which it is possible to deduct tax losses or tax credits (up to a maximum of twelve years, depending on the year
of determination). Thus, possible additional tax assessments may take place due essentially to different interpretations of t ax
As at 31 December 2021 and 2020, the Group recorded deferred tax assets associated with impairments not accepted for tax
purposes for credit operations, which have already been written off, considering the expectation that these will contribute to a taxable
legislation. However, Management believes that, in the context of the consolidated financial statements, there will be no additional
profit in the periods taxation in which the conditions required for tax deductibility are met. As of December 31, 2021, the amounts held
charges of significant value.
by the novobanco Group referring to these realities amount to approximately Euro 37 million.
As at 31 December 2021 and 2020, the Group recorded deferred tax assets associated with impairments not accepted for tax
purposes for credit operations, which have already been written off, considering the expectation that these will contribute t o a taxable
The changes occurred in the deferred tax captions are as follows:
profit in the periods taxation in which the conditions required for tax deductibility are met. As of December 31, 2021, the amounts held
by the novobanco Group referring to these realities amount to approximately Euro 37 million.
(in thousands of Euros)
The changes occurred in the deferred tax captions are as follows:
Balance at the beginning of the exercise
Recognised in Results for the exercise
Recognised in Fair value reserves
Recognised in Other reserves
Balance at the beginning of the exercise
Conversion of Deferred taxes into Tax credits
Recognised in Results for the exercise
Foreign exchange differences and other
Recognised in Fair value reserves
Balance at the end of the exercise (Assets / (Liabilities))
Recognised in Other reserves
Conversion of Deferred taxes into Tax credits
Foreign exchange differences and other
Balance at the end of the exercise (Assets / (Liabilities))
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31.12.2021
31.12.2020
769 767
27 923
892 360
(in thousands of Euros)
( 9 721)
31.12.2021
60 294
31.12.2020
( 4 699)
( 74)
769 767
( 124 721)
27 923
8 015
60 294
741 204
( 74)
( 124 721)
8 015
741 204
2 169
892 360
( 107 705)
( 9 721)
( 2 637)
( 4 699)
769 767
2 169
( 107 705)
( 2 637)
769 767
- 71 -
- 72 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 30 – INCOME TAXES
Tax assets and liabilities recognized in the balance sheet as at 31 December 2021 and 2020 can be analysed as follows:
The deferred tax assets and liabilities recognized in the balance sheet as at 31 December 2021 and 2020 are as follows:
Corporate Tax recoverable / (payable)
Current tax
Other
Deferred tax
Financial instruments
Impairment losses on loans (not covered)
Impairment losses on loans (covered)
Other tangible assets
Provisions
Pensions
Other
Long-term service bonuses
Tax losses carried forward
Deferred tax asset / (liability)
Asset / liability set-off for deferred tax purposes
Net Deferred tax asset / (liability)
31.12.2021
(in thousands of Euros)
31.12.2020
Assets
Liabilities
Assets
Liabilities
35 653
142
35 511
744 239
779 892
12 262
12 162
100
3 035
15 297
610
144
466
774 888
775 498
9 203
9 129
74
5 121
14 324
(in thousands of Euros)
Assets
Liabilities
Net
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2020
92 300
339 022
267 341
-
82 240
48 995
21
124
751
64 322
790 784
-
-
39 136
31 676
22
123
751
( 78 526)
( 138 855)
( 8 029)
( 8 203)
( 3 035)
( 9 989)
13 774
339 022
267 341
( 8 029)
82 240
48 995
21
( 2 911)
751
-
-
-
-
-
-
( 74 533)
790 784
-
( 8 203)
39 136
31 676
22
( 9 866)
751
-
-
-
-
-
-
830 794
926 814
( 89 590)
( 157 047)
741 204
769 767
( 86 555)
( 151 926)
744 239
774 888
86 555
( 3 035)
151 926
-
-
( 5 121)
741 204
769 767
As of 31 December 2021 the deferred tax related to temporary differences was determined based on an aggregate rate of 31%,
resulting from the sum of the general IRC rate (21%), the Municipal Surcharge of 1.5% and an average rate of State Surcharge of
8.5%.
As of 31 December 2021, the deferred tax related to temporary differences was determined based on
an aggregate rate of 31%, resulting from the sum of the general IRC rate (21%), the Municipal Surcharge
of 1.5% and an average rate of State Surcharge of 8.5%.
On 4th September 2019, Law No. 98/2019 was published, which amended the IRC Code on the tax treatment of credit institutions'
impairments, creating rules applicable to impairment losses recorded in the tax periods beginning before 1st January 2019, not yet
accepted for tax purposes. This Law established a transition period for the aforementioned tax regime, which allows taxpayers in the
five tax periods beginning on or after January 1, 2019, to continue to apply the tax regime in force before publication of this law,
except if they perform the exercise of opt in until the end of October of each tax period of the adaptation regime. Therefore, on
December 31, 2021, the Group continued to apply Regulatory Decree no. 13/2018, of December 28, which aims to extend, for tax
purposes, the tax framework that derives from Notice no. 3/95 of the Bank of Portugal.
On 4th September 2019, Law No. 98/2019 was published, which amended the IRC Code on the tax
treatment of credit institutions’ impairments, creating rules applicable to impairment losses recorded
in the tax periods beginning before 1st January 2019, not yet accepted for tax purposes. This Law
established a transition period for the aforementioned tax regime, which allows taxpayers in the five
tax periods beginning on or after January 1, 2019, to continue to apply the tax regime in force before
the publication of this law, except if they perform the exercise of opt in until the end of October of
each tax period of the adaptation regime. Therefore, on December 31, 2021, the Group continued to
apply Regulatory Decree no. 13/2018, of December 28, which aims to extend, for tax purposes, the tax
framework that derives from Notice no. 3/95 of the Bank of Portugal.
The IRC payment declarations are subject to inspection and possible adjustment by the Tax Authorities for a period of four years or
during the period in which it is possible to deduct tax losses or tax credits (up to a maximum of twelve years, depending on the year
of determination). Thus, possible additional tax assessments may take place due essentially to different interpretations of tax
legislation. However, Management believes that, in the context of the consolidated financial statements, there will be no additional
charges of significant value.
As at 31 December 2021 and 2020, the Group recorded deferred tax assets associated with impairments not accepted for tax
purposes for credit operations, which have already been written off, considering the expectation that these will contribute to a taxable
profit in the periods taxation in which the conditions required for tax deductibility are met. As of December 31, 2021, the amounts held
by the novobanco Group referring to these realities amount to approximately Euro 37 million.
As at 31 December 2021 and 2020, the Group recorded deferred tax assets associated with impairments
not accepted for tax purposes for credit operations, which have already been written off, considering
the expectation that these will contribute to a taxable profit in the periods taxation in which the
conditions required for tax deductibility are met. As of December 31, 2021, the amounts held by the
novobanco Group referring to these realities amount to approximately Euro 37 million.
The IRC payment declarations are subject to inspection and possible adjustment by the Tax Authorities
for a period of four years or during the period in which it is possible to deduct tax losses or tax credits
(up to a maximum of twelve years, depending on the year of determination). Thus, possible additional
tax assessments may take place due essentially to different interpretations of tax legislation. However,
Management believes that, in the context of the consolidated financial statements, there will be no
additional charges of significant value.
The changes occurred in the deferred tax captions are as follows:
Balance at the beginning of the exercise
Recognised in Results for the exercise
Recognised in Fair value reserves
Recognised in Other reserves
Conversion of Deferred taxes into Tax credits
Foreign exchange differences and other
Balance at the end of the exercise (Assets / (Liabilities))
The changes occurred in the deferred tax captions are as follows:
(in thousands of Euros)
31.12.2021
31.12.2020
769 767
27 923
60 294
( 74)
( 124 721)
8 015
741 204
892 360
( 9 721)
( 4 699)
2 169
( 107 705)
( 2 637)
769 767
- 71 -
The current and deferred taxes recognized in the income statement and in reserves, in 2021 and 2020,
had the following origins:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The current and deferred taxes recognized in the income statement and in reserves, in 2021 and 2020, had the following origins:
(in thousands of Euros)
Financial instruments
Impairment losses on loans and advances to customers
Other tangible assets
Provisions
Pensions
Long-term service bonuses
Other
Tax losses carried forward
Deferred taxes
Current taxes
Total tax recognised (income) / expense
31.12.2021
31.12.2020
Recognised in the
income statement
Recognised in
reserves
Recognised in the
income statement
Recognised in
reserves
( 28 322)
59 699
( 174)
( 43 105)
( 17 393)
1
1 371
-
( 27 923)
12 737
( 15 186)
( 60 294)
-
-
-
74
-
-
-
( 60 220)
-
( 60 220)
( 11 350)
14 041
( 174)
9 424
( 2 100)
1
( 132)
11
9 721
( 8 639)
1 082
4 699
-
-
-
( 2 169)
-
-
-
2 530
-
2 530
The reconciliation of the corporate income tax rate, for the portion recognized in the income statement, may be analyzed as follows:
Impairment on investments in subsidiaries or associated companies subject to Participation Exemption
Income before tax
Tax rate of novobanco
Tax-exempt dividends
Income tax calculated based on the tax rate of NOVO BANCO
Rate differential on the generation / reversal of timing differences
Profits / losses in units with a more favorable tax regime
Taxes of Bank Branches and tax withheld abroad
Impairments and provisions for loans
Impairment and fair value adjustments on securities
Provisions for other risks, costs and contingencies
Share of profits / (losses) of associated companies
Employees' long term benefits
Deffered tax assets not recognized under tax losses for the exercise
Contribution and Solidarity additional contribution over the Banking Sector
Other
Total income recognised
Deferred tax assets recoverability analysis
(in thousands of Euros)
31.12.2021
31.12.2020
%
Amount
%
Amount
177 003
(1 338 309)
21.0
(0.9)
(23.3)
17.9
0.2
1.2
(30.1)
(21.3)
(8.9)
-
(5.7)
36.8
4.0
0.4
(8.6)
37 171
( 1 593)
( 41 203)
31 650
326
2 138
( 53 201)
( 37 715)
( 15 830)
-
( 10 044)
65 183
7 158
774
( 15 186)
(11.0)
21.0
0.0
(3.0)
3.5
(0.2)
(0.2)
(7.8)
(1.6)
(0.0)
(0.0)
(1.2)
(0.5)
0.9
(0.1)
( 281 045)
( 482)
40 166
( 46 706)
2 107
2 902
147 255
104 665
21 988
61
( 324)
15 913
6 860
( 12 278)
1 082
Deferred tax assets are recognized to the extent they are expected to be recovered with future taxable income. The Group has
evaluated the recoverability of the deferred tax assets considering its expectations of future taxable profits until 2028. The
recoverability of deferred tax assets covered by the Special Regime applicable to Deferred Tax Assets is not dependent on the
generation of future taxable income.
The assessment of the recoverability of the deferred tax assets is made annually. With reference to 31 December 2021, this exercise
was made based on the latest draft version of the business plan (“MTP”) for the period 2022-2024, preliminarily considered by the
General Supervisory Board in December 2021 and which, upon final approval, will be submitted to the European Central Bank in the
end of March 2022.
In the evaluation of the expectation of future taxable income generation in Portugal for the purposes of the above recovery exercise,
the following assumptions were also considered:
In addition to the detailed estimates up to 2024, it is assumed, thereafter an increase in pre-tax results at a rate of 2.60%
from 2024;
Commercial financial results moderate growth, offsetting the expected cost of debt issuing to meet MREL requirements, as
well as the continuing development of new lines of activity and the resumption of economic activity, which is strongly affected
by the current pandemic situation. The growth in economic activity should also provide a return to commission levels to
values similar to previous years;
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 72 -
233
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The current and deferred taxes recognized in the income statement and in reserves, in 2021 and 2020, had the following origins:
Impairment losses on loans and advances to customers
Financial instruments
Other tangible assets
Provisions
Pensions
Long-term service bonuses
Other
Tax losses carried forward
Deferred taxes
Current taxes
Total tax recognised (income) / expense
31.12.2021
31.12.2020
Recognised in the
Recognised in
Recognised in the
Recognised in
income statement
reserves
income statement
reserves
(in thousands of Euros)
( 60 294)
4 699
( 28 322)
59 699
( 174)
( 43 105)
( 17 393)
1
1 371
-
74
-
-
-
-
-
-
( 27 923)
( 60 220)
12 737
( 15 186)
-
( 60 220)
( 11 350)
14 041
( 174)
9 424
( 2 100)
1
( 132)
11
9 721
( 8 639)
1 082
( 2 169)
-
-
-
-
-
-
2 530
-
2 530
The reconciliation of the corporate income tax rate, for the portion recognized in the income statement,
may be analyzed as follows:
The reconciliation of the corporate income tax rate, for the portion recognized in the income statement, may be analyzed as follows:
Income before tax
Tax rate of novobanco
Income tax calculated based on the tax rate of NOVO BANCO
Tax-exempt dividends
Impairment on investments in subsidiaries or associated companies subject to Participation Exemption
Rate differential on the generation / reversal of timing differences
Profits / losses in units with a more favorable tax regime
Taxes of Bank Branches and tax withheld abroad
Impairments and provisions for loans
Impairment and fair value adjustments on securities
Provisions for other risks, costs and contingencies
Share of profits / (losses) of associated companies
Employees' long term benefits
Deffered tax assets not recognized under tax losses for the exercise
Contribution and Solidarity additional contribution over the Banking Sector
Other
Total income recognised
Deferred tax assets recoverability analysis
(in thousands of Euros)
31.12.2021
31.12.2020
%
Amount
%
Amount
177 003
(1 338 309)
21.0
(0.9)
(23.3)
17.9
0.2
1.2
(30.1)
(21.3)
(8.9)
-
(5.7)
36.8
4.0
0.4
(8.6)
37 171
( 1 593)
( 41 203)
31 650
326
2 138
( 53 201)
( 37 715)
( 15 830)
-
( 10 044)
65 183
7 158
774
( 15 186)
21.0
0.0
(3.0)
3.5
(0.2)
(0.2)
(11.0)
(7.8)
(1.6)
(0.0)
(0.0)
(1.2)
(0.5)
0.9
(0.1)
( 281 045)
( 482)
40 166
( 46 706)
2 107
2 902
147 255
104 665
21 988
61
( 324)
15 913
6 860
( 12 278)
1 082
Deferred tax assets recoverability analysis
Deferred tax assets are recognized to the extent they are expected to be recovered with future taxable income. The Group has
evaluated the recoverability of the deferred tax assets considering its expectations of future taxable profits until 2028. The
recoverability of deferred tax assets covered by the Special Regime applicable to Deferred Tax Assets is not dependent on the
generation of future taxable income.
growth in economic activity should also provide a return to commission levels to values similar to
previous years;
Deferred tax assets are recognized to the extent they are expected to be recovered with future
The assessment of the recoverability of the deferred tax assets is made annually. With reference to 31 December 2021, this exercise
was made based on the latest draft version of the business plan (“MTP”) for the period 2022-2024, preliminarily considered by the
taxable income. The Group has evaluated the recoverability of the deferred tax assets considering its
General Supervisory Board in December 2021 and which, upon final approval, will be submitted to the European Central Bank in the
expectations of future taxable profits until 2028. The recoverability of deferred tax assets covered by
end of March 2022.
the Special Regime applicable to Deferred Tax Assets is not dependent on the generation of future
taxable income.
In the evaluation of the expectation of future taxable income generation in Portugal for the purposes of the above recovery exercise,
the following assumptions were also considered:
• Operating costs reduction, based on specific cost reduction plans and the implementation of a new
distribution model, reflecting the favorable effect of the decrease in the number of employees and
branches and, generally, the simplification and increase in the efficiency of processes, focusing on
the digital component; and
• Progressive recovery of interest rate benchmarks to positive levels;
The assessment of the recoverability of the deferred tax assets is made annually. With reference to 31
December 2021, this exercise was made based on the latest draft version of the business plan (“MTP”)
for the period 2022-2024, preliminarily considered by the General Supervisory Board in December 2021
and which, upon final approval, will be submitted to the European Central Bank in the end of March
2022.
In addition to the detailed estimates up to 2024, it is assumed, thereafter an increase in pre-tax results at a rate of 2.60%
from 2024;
Commercial financial results moderate growth, offsetting the expected cost of debt issuing to meet MREL requirements, as
well as the continuing development of new lines of activity and the resumption of economic activity, which is strongly affected
by the current pandemic situation. The growth in economic activity should also provide a return to commission levels to
values similar to previous years;
• Credit impairment charges in line with the evolution of the Group’s activity and supported by
macroeconomic projections, bearing in mind, in particular, the significant effort made in the last few
years in the provisioning of the loan portfolio and the progressive convergence towards gradually
normalized risk costs.
In the evaluation of the expectation of future taxable income generation in Portugal for the purposes
of the above recovery exercise, the following assumptions were also considered:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
•
In addition to the detailed estimates up to 2024, it is assumed, thereafter an increase in pre-tax
results at a rate of 2.60% from 2024;
• Commercial financial results moderate growth, offsetting the expected cost of debt issuing to
meet MREL requirements, as well as the continuing development of new lines of activity and the
resumption of economic activity, which is strongly affected by the current pandemic situation. The
The evolution of the business plan used for this exercise is strongly conditioned by the evolution of the
- 72 -
Covid-19 pandemic situation, whose evolution is difficult to predict.
Depending on the analysis mentioned above, the amount of deferred taxes not recognized for tax
losses, per year of expiry, is as follows:
234
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Progressive recovery of interest rate benchmarks to positive levels;
Operating costs reduction, based on specific cost reduction plans and the implementation of a new distribution model,
reflecting the favorable effect of the decrease in the number of employees and branches and, generally, the simplification
and increase in the efficiency of processes, focusing on the digital component; and
Credit impairment charges in line with the evolution of the Group's activity and supported by macroeconomic projections,
bearing in mind, in particular, the significant effort made in the last few years in the provisioning of the loan portfolio and the
progressive convergence towards gradually normalized risk costs.
The evolution of the business plan used for this exercise is strongly conditioned by the evolution of the Covid-19 pandemic situation,
whose evolution is difficult to predict.
Progressive recovery of interest rate benchmarks to positive levels;
Depending on the analysis mentioned above, the amount of deferred taxes not recognized for tax losses, per year of expiry, is as
Operating costs reduction, based on specific cost reduction plans and the implementation of a new distribution model,
follows:
reflecting the favorable effect of the decrease in the number of employees and branches and, generally, the simplification
and increase in the efficiency of processes, focusing on the digital component; and
Credit impairment charges in line with the evolution of the Group's activity and supported by macroeconomic projections,
(in thousands of Euros)
bearing in mind, in particular, the significant effort made in the last few years in the provisioning of the loan portfolio and the
31.12.2021
31.12.2020
progressive convergence towards gradually normalized risk costs.
The evolution of the business plan used for this exercise is strongly conditioned by the evolution of the Covid-19 pandemic situation,
whose evolution is difficult to predict.
2024-2026
2026 and following
313 192
1 163 678
1 476 870
468 903
1 124 790
1 593 693
Depending on the analysis mentioned above, the amount of deferred taxes not recognized for tax losses, per year of expiry, is as
follows:
In addition, during the financial year 2020, the Group became aware of the Tax Authority’s position with regards to adjustments
resulting from the application of fair value to units in real estate investment funds and private equity funds. Such position implies that
fair value adjustments to units of real estate investment funds and private equity funds do not contribute to the taxable profit in the
respective year of booking. For the purpose of taxable income, such adjustments will only be accounted for at the moment of the
respective realization, namely upon sale of the participation units or liquidation of the funds. The total amount of deferred tax assets
related to these temporary differences, not recognized in the balance sheet, at December 31, 2021 amounts to Euro 333.5 million.
(in thousands of Euros)
31.12.2021
31.12.2020
2024-2026
2026 and following
313 192
1 163 678
468 903
1 124 790
Special Regime applicable to Deferred Tax Assets
1 476 870
1 593 693
During 2014, novobanco adhered to the Special Regime applicable to deferred tax assets, after a favourable decision of the
In addition, during the financial year 2020, the Group became aware of the Tax Authority’s position with regards to adjustments
Shareholders General Meeting.
resulting from the application of fair value to units in real estate investment funds and private equity funds. Such position implies that
In addition, during the financial year 2020, the Group became aware of the Tax Authority’s position with
fair value adjustments to units of real estate investment funds and private equity funds do not contribute to the taxable profit in the
The Special Regime applicable to Deferred Tax Assets approved by Law No. 61/2014, of 26 August, covers deferred tax assets
respective year of booking. For the purpose of taxable income, such adjustments will only be accounted for at the moment of the
regards to adjustments resulting from the application of fair value to units in real estate investment
resulting from non-deduction of expenses and negative equity changes related to impairment losses on credit and with post-
respective realization, namely upon sale of the participation units or liquidation of the funds. The total amount of deferred tax assets
funds and private equity funds. Such position implies that fair value adjustments to units of real estate
employment or long-term employee benefits.
related to these temporary differences, not recognized in the balance sheet, at December 31, 2021 amounts to Euro 333.5 million.
investment funds and private equity funds do not contribute to the taxable profit in the respective
year of booking. For the purpose of taxable income, such adjustments will only be accounted for at the
moment of the respective realization, namely upon sale of the participation units or liquidation of the
funds. The total amount of deferred tax assets related to these temporary differences, not recognized
in the balance sheet, at December 31, 2021 amounts to Euro 333.5 million.
The changes to the mentioned above regime, introduced by Law No. 23/2016, of August 19, limited the
temporal application of the above-mentioned negative expenses and equity variations, accounted for
in the tax periods beginning on or after 1January 2016, as well as the associated deferred taxes. Thus,
the deferred taxes covered by this special regime correspond only to expenses and negative equity
variations calculated up to December 31 2015.
The changes to the mentioned above regime, introduced by Law No. 23/2016, of August 19, limited the temporal application of the
above-mentioned negative expenses and equity variations, accounted for in the tax periods beginning on or after 1January 2016, as
Special Regime applicable to Deferred Tax Assets
well as the associated deferred taxes. Thus, the deferred taxes covered by this special regime correspond only to expenses and
negative equity variations calculated up to 31 December 2015.
During 2014, novobanco adhered to the Special Regime applicable to deferred tax assets, after a favourable decision of the
Shareholders General Meeting.
Deferred tax assets covered by the above-mentioned regime are convertible into tax credits when the taxpayer records a negative
net result in the respective tax period, or in case of liquidation by voluntary dissolution or insolvency decreed by court decision.
The Special Regime applicable to Deferred Tax Assets approved by Law No. 61/2014, of 26 August, covers deferred tax assets
resulting from non-deduction of expenses and negative equity changes related to impairment losses on credit and with post-
To convert to a tax credit (other than by liquidation or insolvency), a special reserve should be created for the amount of the respective
employment or long-term employee benefits.
tax credit increased by 10%. The exercise of conversion rights results in the capital increase of the taxable person by incorporation
of the special reserve and issuance of new common shares. This special reserve may not be distributed.
The changes to the mentioned above regime, introduced by Law No. 23/2016, of August 19, limited the temporal application of the
Following the determination of a negative net income for the years between 2016 and 2020, the
above-mentioned negative expenses and equity variations, accounted for in the tax periods beginning on or after 1January 2016, as
deferred tax assets converted or estimated to be converted by reference to the deferred tax assets
Following the determination of a negative net income for the years between 2016 and 2020, the deferred tax assets converted or
well as the associated deferred taxes. Thus, the deferred taxes covered by this special regime correspond only to expenses and
eligible at the balance sheet date are as follows:
estimated to be converted by reference to the deferred tax assets eligible at the balance sheet date are as follows:
negative equity variations calculated up to 31 December 2015.
To convert to a tax credit (other than by liquidation or insolvency), a special reserve should be created
for the amount of the respective tax credit increased by 10%. The exercise of conversion rights results
in the capital increase of the taxable person by incorporation of the special reserve and issuance of new
common shares. This special reserve may not be distributed.
Deferred tax assets covered by the above-mentioned regime are convertible into tax credits when the
taxpayer records a negative net result in the respective tax period, or in case of liquidation by voluntary
dissolution or insolvency decreed by court decision.
The Special Regime applicable to Deferred Tax Assets approved by Law No. 61/2014, of August 26,
covers deferred tax assets resulting from non-deduction of expenses and negative equity changes
related to impairment losses on credit and with post-employment or long-term employee benefits.
During 2014, novobanco adhered to the Special Regime applicable to deferred tax assets, after a
favourable decision of the Shareholders General Meeting.
Special Regime applicable to Deferred Tax Assets
Deferred tax assets covered by the above-mentioned regime are convertible into tax credits when the taxpayer records a negative
(in thousands of Euros)
net result in the respective tax period, or in case of liquidation by voluntary dissolution or insolvency decreed by court decision.
2020
2019
2018
2017
2016
Tax credit
To convert to a tax credit (other than by liquidation or insolvency), a special reserve should be created for the amount of the respective
tax credit increased by 10%. The exercise of conversion rights results in the capital increase of the taxable person by incorporation
of the special reserve and issuance of new common shares. This special reserve may not be distributed.
124 721
110 922
161 974
127 575
99 474
As a result of Law No. 61/2014, the amount of deferred tax assets to be converted into a tax credit and the constitution of the special
Following the determination of a negative net income for the years between 2016 and 2020, the deferred tax assets converted or
reserve shall be subject to certification by a statutory auditor, as well as to confirmation by the Tax and Customs Authority, within the
estimated to be converted by reference to the deferred tax assets eligible at the balance sheet date are as follows:
scope of the review procedures for the assessment of the taxable income for the relevant tax periods.
As a result of Law No. 61/2014, the amount of deferred tax assets to be converted into a tax credit and the constitution of the special reserve shall be subject to certification by a statutory auditor, as well as to
confirmation by the Tax and Customs Authority, within the scope of the review procedures for the assessment of the taxable income for the relevant tax periods.
(in thousands of Euros)
NOTE 31 – OTHER ASSETS
Tax credit
2020
2019
2018
2017
2016
124 721
110 922
161 974
127 575
99 474
As at 31 December 2021 and 2020, the caption Other assets is analyzed as follows:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As a result of Law No. 61/2014, the amount of deferred tax assets to be converted into a tax credit and the constitution of the special
reserve shall be subject to certification by a statutory auditor, as well as to confirmation by the Tax and Customs Authority, within the
scope of the review procedures for the assessment of the taxable income for the relevant tax periods.
- 73 -
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 73 -
235
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 31 – OTHER ASSETS
As at 31 December 2021 and 2020, the caption Other assets is analyzed as follows:
Collateral deposits placed
Derivative products
Collateral CLEARNET and VISA
Collateral deposits relating to reinsurance operations
Other collateral deposits
Debtors for mortgage credit interest subsidies
Public sector
Contingent Capital Agreement
Other debtors
Income receivable
Deferred costs
Retirement pensions and health benefits (see Note 16)
Precious metals, numismatics, medal collection and other liquid assets
Real estate properties a)
Equipment a)
Stock exchange transactions pending settlement
Other assets
Impairment losses
Real estate properties a)
Equipment a)
Other debtors - Shareholder loans, supplementary capital contributions
Other
(in thousands of Euros)
31.12.2021
31.12.2020
525 229
399 631
33 092
92 457
49
12 300
956 130
209 220
498 681
138 703
48 430
1 684
10 034
589 390
3 189
-
25 001
3 017 991
( 390 762)
( 2 180)
( 110 528)
( 71 971)
( 575 441)
806 215
655 952
33 092
117 127
45
6 756
703 701
598 312
491 627
64 025
52 822
-
9 722
770 054
3 488
60 917
62 752
3 630 391
( 481 358)
( 2 285)
( 124 939)
( 77 517)
( 686 099)
2 442 550
2 944 292
a) Real estate properties and equipment received in settlement of loans and discontinued
The caption Collateral deposits placed includes, amongst others, deposits made by the Group as collateral in order to celebra te
certain derivative contracts on organised markets (margin accounts) and on over the counter markets (Credit Support Annex – CSA).
The caption Collateral deposits placed includes, amongst others, deposits made by the Group as
collateral in order to celebrate certain derivative contracts on organised markets (margin accounts)
and on over the counter markets (Credit Support Annex – CSA).
The CSAs take the form of collateral agreements established between two parties negotiating over-the-counter derivatives with each
other, with the main objective of providing protection against credit risk, defining for that purpose rules regarding collate ral. Derivative
transactions are regulated by the International Swaps and Derivatives Association (ISDA) and have minimum risk margin that ma y
change according to the ratings of the parties.
(31 December 2020: Euro 67.0 million);
• Euro 1.3 million of receivables related to the property sale operation carried out in 2019 (called
• Euro 61.3 million receivable relation to the sale operation of non-performing loans (Project NATA II)
The CSAs take the form of collateral agreements established between two parties negotiating over-
the-counter derivatives with each other, with the main objective of providing protection against
credit risk, defining for that purpose rules regarding collateral. Derivative transactions are regulated by
the International Swaps and Derivatives Association (ISDA) and have minimum risk margin that may
change according to the ratings of the parties.
At 31 December 2021, the caption Other debtors includes, amongst others:
Euro 2.3 million in shareholder loans and supplementary capital contributions granted to entities within the scope of the Group’s
• Euro 4.4 million receivable in relation to the sale operation of non-performing loans in 2020
(denominated “Project Carter”). (December 31, 2020: Euro 27.4 million) (see Note 24);
venture capital business which are entirely provisioned (31 December 2020: Euro 14.7 million, entirely provisioned);
Euro 111.6 million of shareholder loans and supplementary capital contributions resulting from the assignment of loans and
• Euro 29.7 million of amounts receivable related to the transaction of sale of non-productive credits
advances which are entirely provisioned (31 December 2020: Euro 111.6 million, entirely provisioned),
“Project Sertorius”) (31 December 2020: Euro 28.8 million);
Euro 61.3 million receivable relation to the sale operation of non-performing loans (Project NATA II) (31 December 2020: Euro
carried out in 2021 (denominated “Wilkinson Project”) (see Note 24);
At 31 December 2021, the caption Other debtors includes, amongst others:
67.0 million);
• Euro 50.3 million of receivables related to the sale of non-performing loans in 2021 (the “Orion
• Euro 2.3 million in shareholder loans and supplementary capital contributions granted to entities
within the scope of the Group’s venture capital business which are entirely provisioned (31 December
2020: Euro 14.7 million, entirely provisioned);
(December 31, 2020: Euro 27.4 million) (see Note 24);
2020: Euro 28.8 million);
• Euro 111.6 million of shareholder loans and supplementary capital contributions resulting from the
assignment of loans and advances which are entirely provisioned (31 December 2020: Euro 111.6
million, entirely provisioned),
(denominated "Wilkinson Project") (see Note 24);
Euro 1.3 million of receivables related to the property sale operation carried out in 2019 (called “Project Sertorius”) (31 December
Project”) (see Note 24).
Euro 4.4 million receivable in relation to the sale operation of non-performing loans in 2020 (denominated “Project Carter”).
Euro 29.7 million of amounts receivable related to the transaction of sale of non-productive credits carried out in 2021
Euro 50.3 million of receivables related to the sale of non-performing loans in 2021 (the "Orion Project") (see Note 24).
As at 31 December 2021, the caption Deferred costs includes the amount of Euro 37,440 thousand (31 December 2020: Euro 41,346
thousand) related to the difference between the nominal amount of the loans and advances granted to Group employees under the
Collective Labour Agreement (ACT) for the banking sector and their respective fair value at grant date, calculated in accordance with
IFRS 9. This amount is charged to the income statement under staff costs over the lower of the remaining period to the maturi ty of
the loan granted and the estimated remaining years of service life of the employee.
Securities transactions pending settlement reflect the transactions with securities, recorded on the trade date, in accordance with the
accounting policy described in Note 7.10, pending settlement.
236
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 75 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
article 114 of RGICSF, to extend the period the Group has to hold foreclosed assets.
During 2021, an impairment charge of Euro 16.2 million was recorded for the properties in the portfolio
(31 December 2020: Euro 64.4 million). Given the uncertainty associated with the estimated value of
these assets, novobanco Group considers the impacts of the current context of the Covid-19 pandemic
as the assets are revalued.
As at 31 December 2021, the caption Deferred costs includes the amount of Euro 37,440 thousand (31
December 2020: Euro 41,346 thousand) related to the difference between the nominal amount of the
loans and advances granted to Group employees under the Collective Labour Agreement (ACT) for the
banking sector and their respective fair value at grant date, calculated in accordance with IFRS 9. This
amount is charged to the income statement under staff costs over the lower of the remaining period
to the maturity of the loan granted and the estimated remaining years of service life of the employee.
The captions of Real estate properties and equipment relate to foreclosed assets through the recovery of loans and advances and to
discontinued facilities, for which the Group has the objective of immediate sale.
The captions of Real estate properties and equipment relate to foreclosed assets through the recovery of loans and advances and to
discontinued facilities, for which the Group has the objective of immediate sale.
The Group implemented a plan aimed at the immediate sale of all real estate property recorded in Other assets, continuing its efforts
to meet the sales program established, of which we highlight the following (i) the existence of a web site specifically aimed at the sale
The Group implemented a plan aimed at the immediate sale of all real estate property recorded in Other assets, continuing its efforts
of real estate properties; (ii) the development and participation in real estate events both in Portugal and abroad; (iii) the establishment
to meet the sales program established, of which we highlight the following (i) the existence of a web site specifically aimed at the sale
of protocols with several real estate agents; and (iv) the regular sponsorship of auctions. Despite its intention to sell these assets, the
of real estate properties; (ii) the development and participation in real estate events both in Portugal and abroad; (iii) the establishment
Group regularly requests the Bank of Portugal’s authorization, under article 114 of RGICSF, to extend the period the Group ha s to
of protocols with several real estate agents; and (iv) the regular sponsorship of auctions. Despite its intention to sell these assets, the
Securities transactions pending settlement reflect the transactions with securities, recorded on the
hold foreclosed assets.
Group regularly requests the Bank of Portugal’s authorization, under article 114 of RGICSF, to extend the period the Group ha s to
trade date, in accordance with the accounting policy described in Note 7.10, pending settlement.
hold foreclosed assets.
During 2021, an impairment charge of Euro 16.2 million was recorded for the properties in the portfolio (31 December 2020: Euro
64.4 million). Given the uncertainty associated with the estimated value of these assets, novobanco Group considers the impacts of
During 2021, an impairment charge of Euro 16.2 million was recorded for the properties in the portfolio (31 December 2020: Euro
the current context of the Covid-19 pandemic as the assets are revalued.
64.4 million). Given the uncertainty associated with the estimated value of these assets, novobanco Group considers the impacts of
the current context of the Covid-19 pandemic as the assets are revalued.
During 2020, the Group started a process of reorganization of the real estate funds that are the object of consolidation, which implied
the transfer of properties from Other assets to Investment properties according to the strategy defined for them. The gross value of
During 2020, the Group started a process of reorganization of the real estate funds that are the object of consolidation, which implied
the transferred properties amounted to Euro 118,987 thousand and the respective impairment to Euro 66,072 thousand. Since the
the transfer of properties from Other assets to Investment properties according to the strategy defined for them. The gross value of
valuation method for these properties is different, as indicated in the accounting policies (Notes 7.18 and 7.19), the change resulted
the transferred properties amounted to Euro 118,987 thousand and the respective impairment to Euro 66,072 thousand. Since the
in the recognition of a gain of Euro 1,805 thousand recorded in Other operating income.
valuation method for these properties is different, as indicated in the accounting policies (Notes 7.18 and 7.19), the change resulted
in the recognition of a gain of Euro 1,805 thousand recorded in Other operating income.
As described in accounting policy 7.27, the Group evaluates at each reporting date, the recoverability of these assets and assesses
for signs of impairment, with impairment losses being recognized in the income statement.
As described in accounting policy 7.27, the Group evaluates at each reporting date, the recoverability of these assets and assesses
for signs of impairment, with impairment losses being recognized in the income statement.
The changes occurred in impairment losses are presented as follows:
The Group implemented a plan aimed at the immediate sale of all real estate property recorded in
Other assets, continuing its efforts to meet the sales program established, of which we highlight the
following (i) the existence of a web site specifically aimed at the sale of real estate properties; (ii) the
development and participation in real estate events both in Portugal and abroad; (iii) the establishment
of protocols with several real estate agents; and (iv) the regular sponsorship of auctions. Despite its
intention to sell these assets, the Group regularly requests the Bank of Portugal’s authorization, under
The captions of Real estate properties and equipment relate to foreclosed assets through the recovery
of loans and advances and to discontinued facilities, for which the Group has the objective of immediate
sale.
During 2020, the Group started a process of reorganization of the real estate funds that are the object
of consolidation, which implied the transfer of properties from Other assets to Investment properties
according to the strategy defined for them. The gross value of the transferred properties amounted to
Euro 118,987 thousand and the respective impairment to Euro 66,072 thousand. Since the valuation
method for these properties is different, as indicated in the accounting policies (Notes 7.18 and 7.19),
the change resulted in the recognition of a gain of Euro 1,805 thousand recorded in Other operating
income.
As described in accounting policy 7.27, the Group evaluates at each reporting date, the recoverability
of these assets and assesses for signs of impairment, with impairment losses being recognized in the
income statement.
The changes occurred in impairment losses are presented as follows:
The changes occurred in impairment losses are presented as follows:
Balance at the beginning of the exercise
Balance at the beginning of the exercise
Dotation for the exercise
Utilisation during the exercise
Dotation for the exercise
Write-back for the exercise
Utilisation during the exercise
Foreign exchange differences and other (a)
Write-back for the exercise
Foreign exchange differences and other (a)
Balance at the end of the exercise
(in thousands of Euros)
31.12.2021
31.12.2020
(in thousands of Euros)
31.12.2021
686 099
31.12.2020
764 808
34 694
686 099
( 134 726)
34 694
( 16 359)
( 134 726)
5 733
( 16 359)
575 441
5 733
78 613
764 808
( 34 848)
78 613
( 13 938)
( 34 848)
( 108 536)
( 13 938)
686 099
( 108 536)
(a) In 2020 includes Euro 66,072 thousand of impairment of assets transferred to Investment Properties during the financial year 2020 (see Note 28) and Euro 19,854
Balance at the end of the exercise
thousand of impairment of assets of the Spanish Branch transferred to discontinued operations.
(a) In 2020 includes Euro 66,072 thousand of impairment of assets transferred to Investment Properties during the financial year 2020 (see Note 28) and Euro 19,854
thousand of impairment of assets of the Spanish Branch transferred to discontinued operations.
686 099
575 441
The changes occurred in the real estate properties were as follows:
The changes occurred in the real estate properties were as follows:
The changes occurred in the real estate properties were as follows:
Balance at the beginning of the exercise
Balance at the beginning of the exercise
Additions
Disposals
Additions
Other movements (a)
Disposals
Other movements (a)
Balance at the end of the exercise
31.12.2021
(in thousands of Euros)
31.12.2020
(in thousands of Euros)
31.12.2021
770 054
31.12.2020
977 465
44 662
770 054
( 170 501)
44 662
( 54 825)
( 170 501)
589 390
( 54 825)
30 691
977 465
( 93 936)
30 691
( 144 166)
( 93 936)
770 054
( 144 166)
(a) Includes Euro 118,987 thousand of assets transferred to Investment Properties during the financial year 2020 and Euro 50,208 thousand transferred in 2021 (see Note 28). It also
Balance at the end of the exercise
includes Euro 31,732 thousand of assets of the Spanish Branch transferred to discontinued operations in 2020.
589 390
770 054
(a) Includes Euro 118,987 thousand of assets transferred to Investment Properties during the financial year 2020 and Euro 50,208 thousand transferred in 2021 (see Note 28). It also
includes Euro 31,732 thousand of assets of the Spanish Branch transferred to discontinued operations in 2020.
237
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 76 -
- 76 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
As at 31 December 2021 and 2020, the detail of the real estate properties included in Other assets, by type of property, is as follows:
As at 31 December 2021 and 2020, the detail of the real estate properties included in Other assets, by type of property, is as follows:
31.12.2021
(in thousands of Euros)
Number of
properties
Gross value
Impairment
Net book value
Fair value of
assets (b)
Land
Urban
Rural
Buildings under construction
Commercial
Residential
Others
Others (a)
341
91
432
496
1 187
151
1 834
83 965
190 648
274 613
179 579
104 084
4 277
287 940
-
26 837
589 390
(a) The net book value of this caption is negative due to the imputation of costs incurred with the sale of real estate properties
2 266
(b) Determined in accordance with accounting policy mentioned in Note 7.18
42 853
149 359
192 212
134 729
29 341
1 184
165 254
33 296
390 762
41 112
41 289
82 401
44 850
74 743
3 093
122 686
( 6 459)
198 628
38 955
44 214
83 169
47 210
84 378
3 129
134 717
( 6 459)
211 427
Land
Urban
Rural
Buildings under construction
Commercial
Residential
Other
Other (a)
31.12.2020
(in thousands of Euros)
Number of
properties
Gross value
Impairment
Net book value
Fair value of
assets (b)
520
207
727
1 041
1 483
-
2 524
2
75 122
195 556
270 678
356 643
142 592
-
499 235
34 055
145 732
179 787
255 203
38 721
-
293 924
141
7 647
3 253
770 054
481 358
41 067
49 824
90 891
101 440
103 871
-
205 311
( 7 506)
288 696
46 030
58 652
104 682
138 103
115 506
-
253 609
( 7 506)
350 785
(a) The net book value of this caption is negative due to the imputation of costs incurred with the sale of real estate properties
(b) Determined in accordance with accounting policy mentioned in Note 7.18
The detail of the real estate properties included in Other Assets, by ageing, is as follows:
The detail of the real estate properties included in Other Assets, by ageing, is as follows:
Land
Urban
Rural
Buildings under construction
Commercial
Residential
Other
Other (a)
31.12.2021
(in thousands of Euros)
Up to 1 year
1 to 2.5 years 2.5 to 5 years
More than 5
years
Total net book
value
15 945
13
15 958
1 309
3 883
6
5 198
5
145
95
240
2 562
5 528
2 509
10 599
( 3 959)
201
14 526
14 727
9 483
21 647
309
31 439
-
24 821
26 655
51 476
31 496
43 685
269
75 450
( 2 505)
41 112
41 289
82 401
44 850
74 743
3 093
122 686
( 6 459)
21 161
6 880
46 166
124 421
198 628
238
(a) The net book value of this caption is negative due to the imputation of costs incurred with the sale of real estate properties
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 77 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
As at 31 December 2021 and 2020, the detail of the real estate properties included in Other assets, by type of property, is as follows:
Buildings under construction
Land
Urban
Rural
Commercial
Residential
Other
Other (a)
Land
Urban
Rural
Commercial
Residential
Other
Other (a)
Buildings under construction
Number of
properties
Gross value
Impairment
Net book value
31.12.2021
(in thousands of Euros)
Fair value of
assets (b)
341
91
432
496
1 187
151
1 834
83 965
190 648
274 613
179 579
104 084
4 277
287 940
42 853
149 359
192 212
134 729
29 341
1 184
165 254
41 112
41 289
82 401
44 850
74 743
3 093
122 686
38 955
44 214
83 169
47 210
84 378
3 129
134 717
-
26 837
33 296
( 6 459)
( 6 459)
2 266
589 390
390 762
198 628
211 427
Number of
properties
Gross value
Impairment
Net book value
31.12.2020
(in thousands of Euros)
Fair value of
assets (b)
520
207
727
1 041
1 483
-
2 524
2
75 122
195 556
270 678
356 643
142 592
-
34 055
145 732
179 787
255 203
38 721
-
41 067
49 824
90 891
101 440
103 871
-
46 030
58 652
104 682
138 103
115 506
-
499 235
293 924
205 311
253 609
141
7 647
( 7 506)
( 7 506)
3 253
770 054
481 359
288 696
350 785
(a) The net book value of this caption is negative due to the imputation of costs incurred with the sale of real estate properties
(b) Determined in accordance with accounting policy mentioned in Note 7.18
(a) The net book value of this caption is negative due to the imputation of costs incurred with the sale of real estate properties
(b) Determined in accordance with accounting policy mentioned in Note 7.18
The detail of the real estate properties included in Other Assets, by ageing, is as follows:
Land
Urban
Rural
Buildings under construction
Commercial
Residential
Other
Other (a)
31.12.2021
(in thousands of Euros)
Up to 1 year
1 to 2.5 years 2.5 to 5 years
More than 5
years
Total net book
value
15 945
13
15 958
1 309
3 883
6
5 198
5
145
95
240
2 562
5 528
2 509
10 599
( 3 959)
201
14 526
14 727
9 483
21 647
309
31 439
-
24 821
26 655
51 476
31 496
43 685
269
75 450
( 2 505)
41 112
41 289
82 401
44 850
74 743
3 093
122 686
( 6 459)
21 161
6 880
46 166
124 421
198 628
(a) The net book value of this caption is negative due to the imputation of costs incurred with the sale of real estate properties
31.12.2020
(in thousands of Euros)
Up to 1 year
1 to 2.5 years 2.5 to 5 years
More than 5
years
Total net book
value
Land
Urban
Rural
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Buildings under construction
Commercial
Residential
Other (a)
128
153
281
10 975
7 707
18 682
( 3 537)
2 110
2 730
4 840
20 020
16 779
36 799
-
29 295
15 500
44 795
23 541
28 444
51 985
-
9 535
31 442
40 977
46 904
50 939
97 843
( 3 969)
- 76 -
41 067
49 824
90 891
101 440
103 871
205 311
( 7 506)
15 426
41 639
96 780
134 851
288 696
(a) The net book value of this caption is negative due to the imputation of costs incurred with the sale of real estate properties
As at 31 December 2021, the amount related to discontinued facilities included in the caption Real estate properties amounts to Euro 9,848 thousand (31 December 2020: Euro 15,917 thousand), having the Group
recorded impairment losses for these assets in the total amount of Euro 4,863 thousand (31 December 2020: Euro 8,273 thousand).
As at 31 December 2021, the amount related to discontinued facilities included in the caption Real estate properties amounts to Euro
9,848 thousand (31 December 2020: Euro 15,917 thousand), having the Group recorded impairment losses for these assets in the
total amount of Euro 4,863 thousand (31 December 2020: Euro 8,273 thousand).
NOTE 32 – NON-CURRENT ASSETS AND DISPOSAL GROUPS FOR SALE CLASSIFIED AS HELD FOR SALE AND
LIABILITIES INCLUDED IN DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE
Under IFRS 5 - Non-current assets held for sale and discontinued operations, a group of directly associated assets and liabilities are
reclassified for discontinued operations if their balance sheet value is recoverable through a sale transaction, which must be ready
for immediate sale.
This category includes the subsidiaries and associated companies in the Group's consolidation perimeter, but which the Bank intends
to sell and are actively in the process of selling with the net value of assets and liabilities measured at the lower of book value or fair
value net of costs to sell.
239
The breakdown of Non-current assets and liabilities held for sale and discontinued operations on 31 December 2021 and 2020, net
of consolidation adjustments, is as follows:
Ativos/Passivos de operações descontinuadas
Non-current assets and liabilities disposal groups classified as held for sale
International Investment Bank, S.A. (previous BICV)
Banco Well Link (anterior NB Ásia)
Banco Delle Tre Venezie
Económico FI
Greendraive
ESEGUR
Multipessoal
NB Servicios
Novo Vanguarda
Ijar Leasing
Imbassaí
novobanco - Spain Branch
Perdas por imparidade
Impairment losses
novobanco - Spain Branch
Banco Delle Tre Venezie
Económico FI
Greendraive
ESEGUR
Ijar Leasing
31.12.2021
31.12.2020
Assets
Liabilities
Assets
Liabilities
(in thousand of Euros)
1 300
2 039
3 060
1 392
-
-
-
-
-
-
-
-
-
9 051
1 006
17 848
( 2 358)
( 1 392)
( 4 725)
( 8 475)
9 373
563
1 969
1 696 245
1 993 851
535
27
405
968
1 745 590
1 996 382
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 299
1 883
9 633
3 060
1 887
14 003
2 687
14 845
48
-
-
( 166 000)
( 7 333)
( 2 023)
( 1 887)
( 8 829)
-
( 186 072)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
968
1 559 518
1 996 382
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 77 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Buildings under construction
Land
Urban
Rural
Commercial
Residential
Other (a)
31.12.2020
(in thousands of Euros)
Up to 1 year
1 to 2.5 years 2.5 to 5 years
More than 5
Total net book
years
value
128
153
281
10 975
7 707
18 682
( 3 537)
2 110
2 730
4 840
20 020
16 779
36 799
-
29 295
15 500
44 795
23 541
28 444
51 985
-
9 535
31 442
40 977
46 904
50 939
97 843
( 3 969)
41 067
49 824
90 891
101 440
103 871
205 311
( 7 506)
15 426
41 639
96 780
134 851
288 696
(a) The net book value of this caption is negative due to the imputation of costs incurred with the sale of real estate properties
As at 31 December 2021, the amount related to discontinued facilities included in the caption Real estate properties amounts to Euro
9,848 thousand (31 December 2020: Euro 15,917 thousand), having the Group recorded impairment losses for these assets in the
total amount of Euro 4,863 thousand (31 December 2020: Euro 8,273 thousand).
NOTE 32 – NON-CURRENT ASSETS AND DISPOSAL GROUPS FOR SALE CLASSIFIED AS HELD FOR SALE AND
LIABILITIES INCLUDED IN DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE
NOTE 32 – NON-CURRENT ASSETS AND
Under IFRS 5 - Non-current assets held for sale and discontinued operations, a group of directly associated assets and liabilities are
DISPOSAL GROUPS FOR SALE CLASSIFIED AS
reclassified for discontinued operations if their balance sheet value is recoverable through a sale transaction, which must b e ready
for immediate sale.
HELD FOR SALE AND LIABILITIES INCLUDED IN
This category includes the subsidiaries and associated companies in the Group's consolidation perimeter, but which the Bank in tends
DISPOSAL GROUPS CLASSIFIED AS HELD FOR
to sell and are actively in the process of selling with the net value of assets and liabilities measured at the lower of book value or fair
value net of costs to sell.
SALE
Under IFRS 5 - Non-current assets held for sale and discontinued operations, a group of directly
associated assets and liabilities are reclassified for discontinued operations if their balance sheet value
is recoverable through a sale transaction, which must be ready for immediate sale.
This category includes the subsidiaries and associated companies in the Group’s consolidation
perimeter, but which the Bank intends to sell and are actively in the process of selling with the net value
of assets and liabilities measured at the lower of book value or fair value net of costs to sell.
The breakdown of Non-current assets and liabilities held for sale and discontinued operations on 31
December 2021 and 2020, net of consolidation adjustments, is as follows:
The breakdown of Non-current assets and liabilities held for sale and discontinued operations on 31 December 2021 and 2020, net
of consolidation adjustments, is as follows:
Non-current assets and liabilities disposal groups classified as held for sale
International Investment Bank, S.A. (previous BICV)
Banco Well Link (previous NB Ásia)
Banco Delle Tre Venezie
Económico FI
Greendraive
ESEGUR
Multipessoal
novobanco - Spain Branch
NB Servicios
Novo Vanguarda
Ijar Leasing
Imbassaí
Impairment losses
Perdas por imparidade
novobanco - Spain Branch
Banco Delle Tre Venezie
Económico FI
Greendraive
ESEGUR
Ijar Leasing
31.12.2021
31.12.2020
Assets
Liabilities
Assets
Liabilities
(in thousand of Euros)
1 300
2 039
-
3 060
1 392
-
-
-
-
-
9 051
1 006
17 848
-
-
( 2 358)
( 1 392)
-
( 4 725)
( 8 475)
9 373
-
-
-
-
563
-
-
-
-
-
-
405
968
-
-
-
-
-
-
-
1 299
1 883
9 633
3 060
1 887
14 003
2 687
1 696 245
14 845
48
-
-
-
-
-
-
1 969
-
-
1 993 851
535
27
-
-
1 745 590
1 996 382
( 166 000)
( 7 333)
( 2 023)
( 1 887)
( 8 829)
-
( 186 072)
-
-
-
-
-
-
-
968
1 559 518
1 996 382
As at 31 December 2021 and 2020, the results from discontinued operations are as follows:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 78 -
240
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
As at 31 December 2021 and 2020, the results from discontinued operations are as follows:
As at 31 December 2021 and 2020, the results from discontinued operations are as follows:
Profit / (loss) generated by discontinued operations
(in thousand of Euros)
31.12.2021
31.12.2020
(in thousand of Euros)
Profit / (loss) generated by discontinued operations
Greendraive
NOVO AF
GNB Seguros
Greendraive
ESEGUR
NOVO AF
Multipessoal
GNB Seguros
novobanco - Spain Branch
ESEGUR
NB Servicios
Multipessoal
Novo Vanguarda
novobanco - Spain Branch
Imbassaí
NB Servicios
Novo Vanguarda
Imbassaí
87
31.12.2021
-
-
87
-
-
-
-
8 796
-
( 3 588)
-
( 37)
8 796
( 371)
( 3 588)
4 887
( 37)
( 371)
( 1 694)
31.12.2020
1 498
8 057
( 1 694)
52
1 498
51
8 057
( 40 830)
52
( 479)
51
-
( 40 830)
-
( 479)
( 33 345)
-
-
4 887
( 33 345)
(in thousands of Euros)
31.12.2020
8 303
(in thousands of Euros)
31.12.2020
The impairment movement for non-current Assets and Liabilities for disposal classified as held for sale is as follows:
The impairment movement for non-current Assets and Liabilities for disposal classified as held for sale
is as follows:
Balance at the beginning of the exercise
The impairment movement for non-current Assets and Liabilities for disposal classified as held for sale is as follows:
31.12.2021
186 072
Balance at the beginning of the exercise
Charges / (Write-backs)
Utilizations
177 769
-
8 303
-
Exchange differences and other (a)
177 769
Charges / (Write-backs)
186 072
-
Utilizations
Foreign exchange differences and other (a)
(a) Includes Euro 4,725 thousand of impairment of Ijar Leasing transferred from investments in associates in the first half of 2021 (see Note 24) and Euro 8,829 thousand of
-
impairment of ESEGUR reclassified to associates (see Note 24).
Balance at the end of the exercise
9 662
( 164 954)
186 072
( 22 305)
9 662
8 475
( 164 954)
Balance at the end of the exercise
31.12.2021
186 072
( 22 305)
8 475
During 2021, the associates ESEGUR and Multipessoal were transferred from discontinued operations to investments in associates
(a) Includes Euro 4,725 thousand of impairment of Ijar Leasing transferred from investments in associates and Euro 8,829 thousand of impairment of ESEGUR reclassified to
and the stake in Banco Delle Tre Venezie was transferred to financial assets at fair value through other comprehensive income,
associates (see Note 26).
following the sale processes were not active at year end.
During 2021, the associates ESEGUR and Multipessoal were transferred from discontinued operations to investments in associate s
Ijar Leasing
and the stake in Banco Delle Tre Venezie was transferred to financial assets at fair value through other comprehensive income,
During 2021 the associated company Ijar Leasing was transferred to non-current assets held for sale as it is in the process of selling
following the sale processes were not active at year end.
assets with the objective of their sale in the short term.
During 2021, the associates ESEGUR and Multipessoal were transferred from discontinued operations
to investments in associates and the stake in Banco Delle Tre Venezie was transferred to financial
assets at fair value through other comprehensive income, following the sale processes were not active
at year end.
Ijar Leasing
During 2021 the associated company Ijar Leasing was transferred to non-current assets held for sale as it is in the process of selling
NOVO AF
assets with the objective of their sale in the short term.
At the end of 2020 the sale process of this subsidiary in Spain was concluded, and a capital gain of Euro 2.7 million was recognized.
GNB Seguros
Also, as a result of the commitments assumed between the Portuguese State and the European
Commission of Competition, during the 2020 financial year the Group concluded the process of disposal
of its stake in GNB Seguros (25%) to Crédit Agricole Assurances, S.A. (Crédit Agricole Group), having
registered a gain of Euro 6.4 million.
Ijar Leasing
During 2021 the associated company Ijar Leasing was transferred to non-current assets held for sale as
it is in the process of selling assets with the objective of their sale in the short term.
NOVO AF
At the end of 2020 the sale process of this subsidiary in Spain was concluded, and a capital gain of Euro
2.7 million was recognized.
NOVO AF
GNB Seguros
At the end of 2020 the sale process of this subsidiary in Spain was concluded, and a capital gain of Euro 2.7 million was recognized.
Also, as a result of the commitments assumed between the Portuguese State and the European Commission of Competition, during
the 2020 financial year the Group concluded the process of disposal of its stake in GNB Seguros (25%) to Crédit Agricole Assurances,
S.A. (Crédit Agricole Group), having registered a gain of Euro 6.4 million.
GNB Seguros
Also, as a result of the commitments assumed between the Portuguese State and the European Commission of Competition, during
the 2020 financial year the Group concluded the process of disposal of its stake in GNB Seguros (25%) to Crédit Agricole Assurances,
Spanish Branch
S.A. (Crédit Agricole Group), having registered a gain of Euro 6.4 million.
Following the accounting policy followed by the Group, and in accordance with IFRS5 5 - Non-current assets held for sale and
discontinued operations, during the 2020 the Group transferred its activity in Spain to the caption of Non-current assets and divestiture
groups classified as held for sale, as their value is expected to be recovered through a sale transaction and it is highly probable, with
Spanish Branch
the respective assets in immediate sale conditions. The determination of fair value less costs to sell, which took into account the
Following the accounting policy followed by the Group, and in accordance with IFRS5 5 - Non-current assets held for sale and
amounts received from potential interested in partial sales of this activity, the cost of selling a selected loan portfolio, and the cost of
discontinued operations, during the 2020 the Group transferred its activity in Spain to the caption of Non-current assets and divestiture
discontinuing the remaining residual activity, resulted in a need to establish an impairment of Euro 166.0 million.
groups classified as held for sale, as their value is expected to be recovered through a sale transaction and it is highly probable, with
the respective assets in immediate sale conditions. The determination of fair value less costs to sell, which took into account the
On April 2, 2021, novobanco entered into an agreement with ABANCA CORPORACIÓN BANCARIA, S.A to sell a set of assets and
amounts received from potential interested in partial sales of this activity, the cost of selling a selected loan portfolio, and the cost of
liabilities of the Spanish Branch, which took place on 30 November 2021 with the derecognition of the assets and liabilities sold. The
discontinuing the remaining residual activity, resulted in a need to establish an impairm ent of Euro 166.0 million.
assets and liabilities excluded from this transaction, of residual value, remained in the branch's balance sheet, having integrated the
Spanish Branch
Following the accounting policy followed by the Group, and in accordance with IFRS5 5 - Non-current
assets held for sale and discontinued operations, during the 2020 the Group transferred its activity
in Spain to the caption of Non-current assets and divestiture groups classified as held for sale, as
their value is expected to be recovered through a sale transaction and it is highly probable, with the
respective assets in immediate sale conditions. The determination of fair value less costs to sell, which
took into account the amounts received from potential interested in partial sales of this activity, the
241
consolidation perimeter of novobanco, as presented below:
On April 2, 2021, novobanco entered into an agreement with ABANCA CORPORACIÓN BANCARIA, S.A to sell a set of assets and
liabilities of the Spanish Branch, which took place on 30 November 2021 with the derecognition of the assets and liabilities sold. The
assets and liabilities excluded from this transaction, of residual value, remained in the branch's balance sheet, having inte grated the
consolidation perimeter of novobanco, as presented below:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 78 -
- 79 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
cost of selling a selected loan portfolio, and the cost of discontinuing the remaining residual activity,
resulted in a need to establish an impairment of Euro 166.0 million.
On April 2, 2021, novobanco entered into an agreement with ABANCA CORPORACIÓN BANCARIA,
S.A to sell a set of assets and liabilities of the Spanish Branch, which took place on 30 November
2021 with the derecognition of the assets and liabilities sold. The assets and liabilities excluded from
this transaction, of residual value, remained in the branch’s balance sheet, having integrated the
consolidation perimeter of novobanco, as presented below:
Assets
Cash, cash balances at central banks and other demand deposits
Financial assets at fair value through other comprehensive income
Financial assets at amortised cost
Loans and advances to banks
Investments in subsidiaries, joint ventures and associates
Tax assets
Current Tax Assets
Deferred Tax Assets
Other assets
Non-current assets and disposal groups classified as held for sale
Total Assets
Liabilities
Deposits from banks
Provisions
Other liabilities
Passivos incluídos em grupos para alienação classificados como detidos para venda
Total Liabilities
Equity
Other equity
Profit or loss attributable to Shareholders of the parent
Total Equity
Total Liabilities and Equity
(in thousands of Euros)
Disposed assets/liabilities
Assets/liabilities
remaining in the Branch
-
-
( 462 796)
( 462 796)
-
-
-
-
-
( 1 294 344)
( 1 757 140)
-
-
-
( 1 757 140)
( 1 757 140)
-
-
-
( 1 757 140)
5 000
2 751
33 794
33 794
604
37 910
11 929
25 981
9 591
-
89 650
33 885
6 611
28 259
-
68 755
19 804
1 091
20 895
89 650
The conclusion of this transaction had no impact on the income statement at the date of derecognition,
since there was a provision recorded in the balance sheet for Euro 176 million (of which Euro 10 million
reinforced already during 2021), which was partially used. The remaining amount of Euro 15.2 million
was transferred to Provisions for other contingencies related to this transaction (advisory costs, tax
contingencies and other possible claims).
The conclusion of this transaction had no impact on the income statement at the date of derecognition, since there was a provision
recorded in the balance sheet for Euro 176 million (of which Euro 10 million reinforced already during 2021), which was partially used.
The remaining amount of Euro 15.2 million was transferred to Provisions for other contingencies related to this transaction (advisory
costs, tax contingencies and other possible claims).
As part of the aforementioned operation, the subsidiaries Novo Vanguarda and NB Servicios were liquidated, with no impact on the
operating account.
As part of the aforementioned operation, the subsidiaries Novo Vanguarda and NB Servicios were
liquidated, with no impact on the operating account.
NOTE 33 – FINANCIAL LIABILITIES MEASURED AT AMORTISED COST
This caption as at 31 December 2021 and 2020 is analysed as follows:
242
Deposits from banks
Due to customers
assets
Other financial liabilities
Debt securities issued, subordinated debt and liabilities associated to transferred
(in thousands of Euros)
31.12.2021
31.12.2020
Total
Total
10 745 155
27 582 093
10 102 896
26 322 060
1 514 153
1 017 928
374 593
365 883
40 215 994
37 808 767
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 80 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Assets
Cash, cash balances at central banks and other demand deposits
Financial assets at fair value through other comprehensive income
Financial assets at amortised cost
Loans and advances to banks
Investments in subsidiaries, joint ventures and associates
Non-current assets and disposal groups classified as held for sale
Tax assets
Current Tax Assets
Deferred Tax Assets
Other assets
Total Assets
Liabilities
Deposits from banks
Provisions
Other liabilities
Total Liabilities
Equity
Other equity
Total Equity
Total Liabilities and Equity
Passivos incluídos em grupos para alienação classificados como detidos para venda
Profit or loss attributable to Shareholders of the parent
(in thousands of Euros)
Disposed assets/liabilities
Assets/liabilities
remaining in the Branch
-
-
-
-
-
-
-
-
-
-
-
-
-
( 462 796)
( 462 796)
( 1 294 344)
( 1 757 140)
( 1 757 140)
( 1 757 140)
( 1 757 140)
5 000
2 751
33 794
33 794
604
37 910
11 929
25 981
9 591
89 650
33 885
6 611
28 259
-
-
68 755
19 804
1 091
20 895
89 650
The conclusion of this transaction had no impact on the income statement at the date of derecognition, since there was a provision
recorded in the balance sheet for Euro 176 million (of which Euro 10 million reinforced already during 2021), which was partially used.
The remaining amount of Euro 15.2 million was transferred to Provisions for other contingencies related to this transaction (advisory
costs, tax contingencies and other possible claims).
As part of the aforementioned operation, the subsidiaries Novo Vanguarda and NB Servicios were liquidated, with no impact on the
operating account.
NOTE 33 – FINANCIAL LIABILITIES MEASURED AT
AMORTISED COST
NOTE 33 – FINANCIAL LIABILITIES MEASURED AT AMORTISED COST
This caption as at 31 December 2021 and 2020 is analysed as follows:
This caption as at 31 December 2021 and 2020 is analysed as follows:
Deposits from banks
Due to customers
Debt securities issued, subordinated debt and liabilities associated to transferred
assets
Other financial liabilities
31.12.2021
(in thousands of Euros)
31.12.2020
Total
Total
10 745 155
27 582 093
10 102 896
26 322 060
1 514 153
1 017 928
374 593
365 883
40 215 994
37 808 767
Deposits from Banks
The balance of Deposits from banks is composed, as to its nature, as follows:
Deposits from Banks
The balance of Deposits from banks is composed, as to its nature, as follows:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Euros)
- 80 -
31.12.2021
31.12.2020
Deposits from Central Banks
From the European System of Central Banks
Deposits
Other funds
Deposits from credit institutions
Domestic
Deposits
Other funds
Foreign
Deposits
Loans
Operations with repurchase agreements
Other resources
53 126
7 954 000
8 007 126
29 030
7 004 000
7 033 030
158 366
24 523
182 889
455 484
531 973
1 529 847
37 836
2 555 140
155 313
4 788
160 101
651 656
596 534
1 625 724
35 851
2 909 765
2 738 029
3 069 866
10 745 155
10 102 896
As at 31 December 2021, the balance of the European Resources System of Central Banks caption includes Euro 7,954 million
collateralized by the Group's financial assets, within the scope of the third series of long-term refinancing operations of the European
Central Bank (TLTRO III ) The bonus introduced by the ECB in the interest rate of these operations, in accordance with the stipulated
in IAS 20 - Accounting for Government Grants and Disclosure of Government Assistance, is being deducted from the financing costs
on a linear basis for accounting purposes, taking into account the Bank's expectation of complying with the requirements of eligibility
criteria defined by the ECB.
Repurchase agreements operations corresponds to the sale of securities with purchasing agreement (repos), recorded in
accordance with the accounting policy mentioned in Note 7.22.
The breakdown of Deposits from Central Banks and other credit institutions, by residual maturity, as of December 31, 2021 and
2020, is as follows:
243
Deposits from Central Banks
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
Deposits from credit institutions
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
(in thousands of Euros)
31.12.2021
31.12.2020
53 126
1 627 000
6 327 000
8 007 126
1 061 398
963 050
181 609
531 972
2 738 029
29 030
-
7 004 000
7 033 030
918 156
496 630
1 085 594
569 486
3 069 866
10 745 155
10 102 896
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 81 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Deposits from Banks
The balance of Deposits from banks is composed, as to its nature, as follows:
Deposits from Central Banks
From the European System of Central Banks
Deposits from credit institutions
Deposits
Other funds
Domestic
Deposits
Other funds
Foreign
Deposits
Loans
Operations with repurchase agreements
Other resources
(in thousands of Euros)
31.12.2021
31.12.2020
53 126
7 954 000
8 007 126
29 030
7 004 000
7 033 030
158 366
24 523
182 889
455 484
531 973
1 529 847
37 836
2 555 140
155 313
4 788
160 101
651 656
596 534
1 625 724
35 851
2 909 765
2 738 029
3 069 866
10 745 155
10 102 896
As at 31 December 2021, the balance of the European Resources System of Central Banks caption includes Euro 7 954 million
collateralized by the Group's financial assets, within the scope of the third series of long-term refinancing operations of the European
Central Bank (TLTRO III ) The bonus introduced by the ECB in the interest rate of these operations, in accordance with the stipulated
in IAS 20 - Accounting for Government Grants and Disclosure of Government Assistance, is being deducted from the financing costs
on a linear basis for accounting purposes, taking into account the Bank's expectation of complying with the requirements of eligibility
criteria defined by the ECB.
As at 31 December 2021, the balance of the European Resources System of Central Banks caption
includes Euro 7,954 million collateralized by the Group’s financial assets, within the scope of the
third series of long-term refinancing operations of the European Central Bank (TLTRO III ) The bonus
introduced by the ECB in the interest rate of these operations, in accordance with the stipulated in IAS
Repurchase agreements operations corresponds to the sale of securities with purchasing agreement (repos), recorded in
accordance with the accounting policy mentioned in Note 7.22.
20 - Accounting for Government Grants and Disclosure of Government Assistance, is being deducted
from the financing costs on a linear basis for accounting purposes, taking into account the Bank’s
expectation of complying with the requirements of eligibility criteria defined by the ECB.
The breakdown of Deposits from Central Banks and other credit institutions, by residual maturity, as of December 31, 2021 and
2020, is as follows:
Repurchase agreements operations corresponds to the sale of securities with purchasing agreement
(repos), recorded in accordance with the accounting policy mentioned in Note 7.22.
The breakdown of Deposits from Central Banks and other credit institutions, by residual maturity, as of
December 31, 2021 and 2020, is as follows:
Deposits from Central Banks
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
Deposits from credit institutions
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
The analysis of Repurchase agreements operations, by residual maturity, is as follows:
The analysis of Repurchase agreements operations, by residual maturity, is as follows:
International
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
Due to customers
The balance of Deposits due to costumers is composed, as follows:
Due to customers
The balance of Deposits due to costumers is composed, as follows:
Repayable on demand
Demand deposits
Time deposits
Time deposits
Other
Savings accounts
Retirement saving accounts
Other
Other funds
Other
Repayable on demand
Term deposits
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
(in thousands of Euros)
31.12.2021
31.12.2020
53 126
1 627 000
6 327 000
8 007 126
1 061 398
963 050
181 609
531 972
2 738 029
29 030
-
7 004 000
7 033 030
918 156
496 630
1 085 594
569 486
3 069 866
10 745 155
10 102 896
(in thousands of Euros)
31.12.2021
31.12.2020
679 782
850 065
-
225 507
- 80 -
350 014
1 050 203
1 529 847
1 625 724
(in thousands of Euros)
31.12.2021
31.12.2020
12 858 988
11 883 026
9 028 713
191
9 028 904
226 362
5 200 726
5 427 088
9 234 116
251
9 234 367
233 160
4 742 284
4 975 444
254 062
254 062
216 598
216 598
27 582 093
26 322 060
(in thousands of Euros)
31.12.2021
31.12.2020
12 858 988
11 883 026
7 641 456
5 722 112
1 319 466
40 071
7 128 529
5 678 797
1 591 570
40 138
14 723 105
14 439 034
27 582 093
26 322 060
244
As at 31 December 2021 and 2020, the caption Due to customers, by residual maturity periods, is as follows:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 82 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The analysis of Repurchase agreements operations, by residual maturity, is as follows:
The analysis of Repurchase agreements operations, by residual maturity, is as follows:
International
International
Up to 3 months
Up to 3 months
From 3 months to 1 year
From 3 months to 1 year
From 1 to 5 years
From 1 to 5 years
Due to customers
Due to customers
The balance of Deposits due to costumers is composed, as follows:
The balance of Deposits due to costumers is composed, as follows:
Repayable on demand
Repayable on demand
Demand deposits
Demand deposits
Time deposits
Time deposits
Time deposits
Time deposits
Other
Other
Savings accounts
Savings accounts
Retirement saving accounts
Retirement saving accounts
Other
Other
Other funds
Other funds
Other
Other
(in thousands of Euros)
(in thousands of Euros)
31.12.2021
31.12.2021
31.12.2020
31.12.2020
679 782
679 782
850 065
850 065
-
-
1 529 847
1 529 847
225 507
225 507
350 014
350 014
1 050 203
1 050 203
1 625 724
1 625 724
31.12.2021
31.12.2021
(in thousands of Euros)
(in thousands of Euros)
31.12.2020
31.12.2020
12 858 988
12 858 988
11 883 026
11 883 026
9 028 713
9 028 713
191
191
9 028 904
9 028 904
226 362
226 362
5 200 726
5 200 726
5 427 088
5 427 088
254 062
254 062
254 062
254 062
9 234 116
9 234 116
251
251
9 234 367
9 234 367
233 160
233 160
4 742 284
4 742 284
4 975 444
4 975 444
216 598
216 598
216 598
216 598
27 582 093
27 582 093
26 322 060
26 322 060
As at 31 December 2021 and 2020, the caption Due to customers, by residual maturity periods, is as
follows:
As at 31 December 2021 and 2020, the caption Due to customers, by residual maturity periods, is as follows:
As at 31 December 2021 and 2020, the caption Due to customers, by residual maturity periods, is as follows:
Repayable on demand
Repayable on demand
Term deposits
Term deposits
Up to 3 months
Up to 3 months
From 3 months to 1 year
From 3 months to 1 year
From 1 to 5 years
From 1 to 5 years
More than 5 years
More than 5 years
31.12.2021
31.12.2021
(in thousands of Euros)
(in thousands of Euros)
31.12.2020
31.12.2020
12 858 988
12 858 988
11 883 026
11 883 026
7 641 456
7 641 456
5 722 112
5 722 112
1 319 466
1 319 466
40 071
40 071
14 723 105
14 723 105
27 582 093
27 582 093
7 128 529
7 128 529
5 678 797
5 678 797
1 591 570
1 591 570
40 138
40 138
14 439 034
14 439 034
26 322 060
26 322 060
Debt Securities issued, subordinated debt and financial liabilities associated to transferred
assets
This caption has the following breakdown:
Debt Securities issued, subordinated debt and financial liabilities associated to transferred assets
This caption has the following breakdown:
Debt securities issued
Euro Medium Term Notes (EMTN)
Bonds
Subordinated debt
Bonds
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Financial liabilities associated to transferred assets
Asset lending operations
(in thousands of Euros)
31.12.2021
31.12.2020
447 453
606 855
1 054 308
518 866
39 377
558 243
415 394
415 234
- 81 -
- 81 -
44 451
44 451
1 514 153
1 017 928
Under the Covered Bonds Program (“Programa de Emissão de Obrigações Hipotecárias”), which has a maximum amount of Euro
10 000 million, the Group issued covered bonds which, on 31 December 2021, amount to Euro 5,500 million (31 December 2020:
Euro 5,500 million), being these covered bonds totally repurchased by the Group. The main characteristics of the outstanding issues
as at 31 December 2021 and 2020 are as follows:
245
Designation
Issue date
Maturity date
Interest Rate
Market
07/10/2015
07/10/2015
07/10/2015
07/10/2015
22/12/2016
10/12/2019
10/12/2019
07/10/2021
07/10/2024
07/10/2020
07/10/2022
22/12/2023
10/06/2023
10/12/2024
Euribor 3 Months + 0,25%
Euribor 3 Months + 0,25%
Euribor 3 Months + 0,25%
Euribor 3 Months + 0,25%
Euribor 3 Months + 0,25%
Euribor 3 Months + 0,25%
Euribor 3 Months + 0,25%
XDUB
XDUB
XDUB
XDUB
XDUB
XMSM
XMSM
Nominal value
(in thousands
of Euros)
Carrying book
value (in
thousands of
Euros)
NB 2015 SR.1
NB 2015 SR.2
NB 2015 SR.3
NB 2015 SR.4
NB 2015 SR.5
NB 2019 SR.6
NB 2019 SR.7
NB 2015 SR.1
NB 2015 SR.2
NB 2015 SR.3
NB 2015 SR.4
NB 2015 SR.5
NB 2019 SR.6
NB 2019 SR.7
1 000 000
1 000 000
1 000 000
700 000
500 000
750 000
550 000
5 500 000
1 000 000
1 000 000
1 000 000
700 000
500 000
750 000
550 000
5 500 000
Nominal value
(in thousands
of Euros)
Carrying book
value (in
thousands of
Euros)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31.12.2021
31.12.2020
Interest
payment
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Interest
payment
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Designation
Issue date
Maturity date
Interest Rate
Market
07/10/2015
07/10/2015
07/10/2015
07/10/2015
22/12/2016
10/12/2019
10/12/2019
07/10/2021
07/10/2024
07/10/2020
07/10/2022
22/12/2023
10/06/2023
10/12/2024
Euribor 3 Months + 0,25%
Euribor 3 Months + 0,25%
Euribor 3 Months + 0,25%
Euribor 3 Months + 0,25%
Euribor 3 Months + 0,25%
Euribor 3 Months + 0,25%
Euribor 3 Months + 0,25%
XDUB
XDUB
XDUB
XDUB
XDUB
XMSM
XMSM
(in thousands of Euros)
Rating
Moody's
DBRS
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A
A
A
A
A
A
A
A
A
A
A
A
A
A
(in thousands of Euros)
Rating
Moody's
DBRS
These covered bonds are guaranteed by a cover asset pool, comprising mortgage and other assets, segregated in novobanco
Group’s accounts as autonomous patrimony and over which the holders of the relevant covered debt securities have a special creditor
privilege. The conditions of the covered debt securities issues are framed in Decree-Law No. 59/2006, and in Notices No. 5, 6 and 8
and Instruction nº 13/2006 of Bank of Portugal. As at 31 December 2021, the assets that collateralize these covered debt securities
amount to Euro 6,075.1 million (31 December 2020: Euro 6,104.8 million) (see Note 24).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 82 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Debt Securities issued, subordinated debt and financial liabilities associated to transferred assets
This caption has the following breakdown:
Debt securities issued
Euro Medium Term Notes (EMTN)
Bonds
Subordinated debt
Bonds
Financial liabilities associated to transferred assets
Asset lending operations
(in thousands of Euros)
31.12.2021
31.12.2020
447 453
606 855
1 054 308
518 866
39 377
558 243
415 394
415 234
44 451
44 451
1 514 153
1 017 928
Under the Covered Bonds Program (“Programa de Emissão de Obrigações Hipotecárias”), which has
a maximum amount of Euro 10,000 million, the Group issued covered bonds which, on 31 December
2021, amount to Euro 5,500 million (31 December 2020: Euro 5,500 million), being these covered
Under the Covered Bonds Program (“Programa de Emissão de Obrigações Hipotecárias”), which has a maximum amount of Euro
10,000 million, the Group issued covered bonds which, on 31 December 2021, amount to Euro 5,500 million (31 December 2020:
Euro 5,500 million), being these covered bonds totally repurchased by the Group. The main characteristics of the outstanding issues
as at 31 December 2021 and 2020 are as follows:
bonds totally repurchased by the Group. The main characteristics of the outstanding issues as at 31
December 2021 and 2020 are as follows:
31.12.2021
Designation
Nominal value
(in thousands
of Euros)
Carrying book value
(in thousands of
Euros)
Issue date
Maturity date
NB 2015 SR.1
NB 2015 SR.2
NB 2015 SR.3
NB 2015 SR.4
NB 2015 SR.5
NB 2019 SR.6
NB 2019 SR.7
1 000 000
1 000 000
1 000 000
700 000
500 000
750 000
550 000
5 500 000
07/10/2015
07/10/2015
07/10/2015
07/10/2015
22/12/2016
10/12/2019
10/12/2019
07/10/2021
07/10/2024
07/10/2020
07/10/2022
22/12/2023
10/06/2023
10/12/2024
-
-
-
-
-
-
-
-
Designation
Nominal value
(in thousands
of Euros)
Carrying book value
(in thousands of
Euros)
Issue date
Maturity date
31.12.2020
NB 2015 SR.1
NB 2015 SR.2
NB 2015 SR.3
NB 2015 SR.4
NB 2015 SR.5
NB 2019 SR.6
NB 2019 SR.7
1 000 000
1 000 000
1 000 000
700 000
500 000
750 000
550 000
5 500 000
07/10/2015
07/10/2015
07/10/2015
07/10/2015
22/12/2016
10/12/2019
10/12/2019
07/10/2021
07/10/2024
07/10/2020
07/10/2022
22/12/2023
10/06/2023
10/12/2024
-
-
-
-
-
-
-
-
Interest Rate
Market
(in thousands of Euros)
Rating
Moody's
DBRS
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
XDUB
XDUB
XDUB
XDUB
XDUB
XMSM
XMSM
A2
A2
A2
A2
A2
A2
A2
A
A
A
A
A
A
A
Interest Rate
Market
(in thousands of Euros)
Rating
Moody's
DBRS
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
XDUB
XDUB
XDUB
XDUB
XDUB
XMSM
XMSM
A2
A2
A2
A2
A2
A2
A2
A
A
A
A
A
A
A
Interest
payment
Trimestral
Trimestral
Trimestral
Trimestral
Trimestral
Trimestral
Trimestral
Interest
payment
Trimestral
Trimestral
Trimestral
Trimestral
Trimestral
Trimestral
Trimestral
These covered bonds are guaranteed by a cover asset pool, comprising mortgage and other assets,
segregated in novobanco Group’s accounts as autonomous patrimony and over which the holders of
the relevant covered debt securities have a special creditor privilege. The conditions of the covered debt
securities issues are framed in Decree-Law No. 59/2006, and in Notices No. 5, 6 and 8 and Instruction
These covered bonds are guaranteed by a cover asset pool, comprising mortgage and other assets, segregated in novobanco
Group’s accounts as autonomous patrimony and over which the holders of the relevant covered debt securities have a special creditor
privilege. The conditions of the covered debt securities issues are framed in Decree-Law No. 59/2006, and in Notices No. 5, 6 and 8
and Instruction nº 13/2006 of Bank of Portugal. As at 31 December 2021, the assets that collateralize these covered debt securities
amount to Euro 6,075.1 million (31 December 2020: Euro 6,104.8 million) (see Note 24).
nº 13/2006 of Bank of Portugal. As at 31 December 2021, the assets that collateralize these covered
debt securities amount to Euro 6,075.1 million (31 December 2020: Euro 6,104.8 million) (see Note 24).
The changes in the financial years of 2021 and 2020 in debt securities issued, subordinated debt and
financial liabilities associated to transferred assets was as follows:
The changes in the financial years of 2021 and 2020 in debt securities issued, subordinated debt and financial liabilities associated
to transferred assets was as follows:
Balance as at
31.12.2020
Issues
Redemptions b)
LME
Net
purchases
Other
movements a)
Balance as at
31.12.2021
(milhares de euros)
Debt securities issued
Euro Medium Term Notes (EMTN)
Certificates of Deposit
Bonds
Mortgage Bonds
Other responsibilities
Subordinated debt
Bonds
518 866
-
39 377
-
-
558 243
415 234
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Financial liabilities associated to transferred assets
Asset lending operations
44 451
-
-
580 000
-
-
580 000
-
-
( 1 623)
-
( 6 110)
-
-
( 7 733)
-
-
( 81 124)
-
-
( 81 124)
( 4 097)
-
( 5 000)
-
-
( 9 097)
15 431
-
( 1 412)
-
-
14 019
447 453
-
606 855
-
-
1 054 308
-
-
-
-
160
415 394
- 83 -
-
44 451
a) Other movements include accrued interest, corrections for hedging operations, corrections of fair value and exchange rate changes.
b) During 2021, the total EMTN 114 issue of NB Finance in the amount of EUR 1,623m and the Class A issue of Lusitano Mortgage nr 6 in the amount of EUR 6,110m were repaid in advance.
1 017 928
580 000
( 7 733)
( 81 124)
( 9 097)
14 179
1 514 153
Balance as at
31.12.2019
Issues
Redemptions
LME
(in thousands of Euros)
Net
purchases
Other
movements a)
Balance as
at 31.12.2020
246
661 849
45 855
707 704
415 069
44 450
1 167 223
-
-
-
-
-
-
-
( 155 869)
( 570)
( 6 476)
( 6 476)
( 155 869)
( 570)
13 456
( 2)
13 454
518 866
39 377
558 243
-
-
-
-
-
-
-
-
165
415 234
1
44 451
a) Other movements include accrued interest, corrections for hedging operations, corrections of fair value and exchange rate changes.
( 6 476)
( 155 869)
( 570)
13 619
1 017 928
Debt securities issued
Euro Medium Term Notes (EMTN)
Bonds
Subordinated debt
Bonds
Financial liabilities associated to transferred assets
Asset lending operations
Liability Management Exercise (LME)
On July 30, 2021, following a voluntary tender offer (Tender Offer and Solicitation Memorandum), EMTN (i) issued by the Luxem bourg
branch, with a total nominal value of Euro 84.3 million (representing 31.9% of the total nominal amount issued), and (ii) issued by the
subsidiary NB Finance with a total nominal value of Euro 0.1 million (representing 4.8% of the total nominal amount issued). This
operation resulted in a loss of Euro 73,480 thousand.
As at 10 December 2020, following an early redemption offer, the EMTN issued by the subsidiary NB Finance with a total nominal
amount of Euro 440.8 million (out of a total amount of Euro 453.3 million). This operation resulted in a loss in the amount o f Euro
26,980 thousand.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 84 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The changes in the financial years of 2021 and 2020 in debt securities issued, subordinated debt and financial liabilities associated
to transferred assets was as follows:
Debt securities issued
Euro Medium Term Notes (EMTN)
Certificates of Deposit
Bonds
Subordinated debt
Bonds
Financial liabilities associated to transferred assets
Asset lending operations
Balance as at
31.12.2020
Issues
Redemptions
LME
(milhares de euros)
Net
Other
Balance as at
purchases
movements a)
31.12.2021
( 1 623)
( 81 124)
( 4 097)
15 431
447 453
580 000
580 000
( 6 110)
( 7 733)
( 81 124)
( 5 000)
( 9 097)
518 866
-
39 377
558 243
415 234
44 451
-
-
-
-
-
-
-
-
-
-
-
-
-
-
( 1 412)
14 019
-
606 855
1 054 308
160
415 394
-
44 451
a) Other movements include accrued interest, corrections for hedging operations, corrections of fair value and exchange rate changes.
b) During 2021, the total EMTN 114 issue of NB Finance in the amount of EUR 1,623m and the Class A issue of Lusitano Mortgage nr 6 in the amount of EUR 6,110m were repaid in advance.
1 017 928
580 000
( 7 733)
( 81 124)
( 9 097)
14 179
1 514 153
Debt securities issued
Euro Medium Term Notes (EMTN)
Bonds
Subordinated debt
Bonds
Financial liabilities associated to transferred assets
Asset lending operations
Balance as at
31.12.2019
Issues
Redemptions
LME
(in thousands of Euros)
Net
purchases
Other
movements a)
Balance as
at 31.12.2020
661 849
45 855
707 704
415 069
44 450
1 167 223
-
-
-
-
-
-
-
( 6 476)
( 6 476)
( 155 869)
-
( 155 869)
( 570)
-
( 570)
13 456
( 2)
13 454
518 866
39 377
558 243
-
-
-
-
-
-
165
415 234
1
44 451
( 6 476)
( 155 869)
( 570)
13 619
1 017 928
a) Other movements include accrued interest, corrections for hedging operations, corrections of fair value and exchange rate changes.
Liability Management Exercise (LME)
Liability Management Exercise (LME)
On July 30, 2021, following a voluntary tender offer (Tender Offer and Solicitation Memorandum),
EMTN (i) issued by the Luxembourg branch, with a total nominal value of Euro 84.3 million (representing
31.9% of the total nominal amount issued), and (ii) issued by the subsidiary NB Finance with a total
nominal value of Euro 0.1 million (representing 4.8% of the total nominal amount issued). This operation
resulted in a loss of Euro 73,480 thousand.
On July 30, 2021, following a voluntary tender offer (Tender Offer and Solicitation Memorandum), EMTN (i) issued by the Luxembourg
branch, with a total nominal value of Euro 84.3 million (representing 31.9% of the total nominal amount issued), and (ii) issued by the
subsidiary NB Finance with a total nominal value of Euro 0.1 million (representing 4.8% of the total nominal amount issued). This
operation resulted in a loss of Euro 73,480 thousand.
As at 10 December 2020, following an early redemption offer, the EMTN issued by the subsidiary NB
Finance with a total nominal amount of Euro 440.8 million (out of a total amount of Euro 453.3 million).
This operation resulted in a loss in the amount of Euro 26,980 thousand.
As at 10 December 2020, following an early redemption offer, the EMTN issued by the subsidiary NB Finance with a total nominal
amount of Euro 440.8 million (out of a total amount of Euro 453.3 million). This operation resulted in a loss in the amount of Euro
The main characteristics of these liabilities, as at 31 December 2021 and 2020, are as follows:
26,980 thousand.
The main characteristics of these liabilities, as at 31 December 2021 and 2020, are as follows:
Entity
ISIN
Description
Currency
Issue date
31.12.2021
Unit Price
(€)
Carrying
Book value
Maturity
Interest rate
Market
(in thousands of Euros)
Bonds
Lusitano Mortgage nº 6
Lusitano Mortgage nº 6
novobanco
novobanco
Euro Medium Term Notes
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
NB Finance
Subordinated debt
NOVO BANCO
a) Date of the next call option
XS0312981649
XS0312982290
PTNOBIOM0014
PTNOBJOM0005 NB 4.25% 09/23 OBRG.
Lusitano Mortgage nr 6- Classe A
Lusitano Mortgage nr 6- Classe B
NB 3.5% 23/07/24 OBRG.
XS0869315241
XS0877741479
XS0888530911
XS0897950878
XS0972653132
XS1031115014
XS1034421419
XS1038896426
XS1042343308
XS1053939978
XS1055501974
XS1058257905
XS0439764191
BES Luxembourg 3.5% 02/01/43
BES Luxembourg 3.5% 23/01/43
BES Luxembourg 3.5% 19/02/2043
BES Luxembourg 3.5% 18/03/2043
BES Luxembourg ZC
Banco Esp San Lux ZC 12/02/49
Banco Esp San Lux ZC 19/02/49
Banco Esp San Lux ZC 27/02/51
BES Luxembourg ZC 06/03/2051
BES Luxembourg ZC 03/04/48
BES Luxembourg ZC 09/04/52
BES Luxembourg ZC 16/04/46
EMTN 57
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
2007
2007
2021
2021
2013
2013
2013
2013
2013
2014
2014
2014
2014
2014
2014
2014
2009
0.20
1.00
100.00
100.00
31 767
1 500
303 571
270 017
2025 a)
2035 a)
2024
2022 a)
Euribor 3M + 0.40%
Euribor 3M + 0.60%
Fixed rate 3.5%
Euribor 3M + 4.25%
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
42 807
98 081
63 952
47 063
33 649
40 947
11 375
15 602
10 974
37 479
36 512
7 192
1 820
2043
2043
2043
2043
2048
2049
2049
2051
2051
2048
2052
2046
2044
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
XDUB
XDUB
XDUB
XDUB
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
PTNOBFOM0017 NB 06/07/2028
EUR
2018
100.00
415 394
2023 a)
8.50%
XDUB
1 469 702
Entity
ISIN
Description
Currency
Issue date
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Bonds
31.12.2020
Unit Price
(€)
Carrying
Book value
Maturity
Interest rate
Market
- 83 -
(in thousands of Euros)
Lusitano Mortgage nº 6
Lusitano Mortgage nº 6
XS0312981649
XS0312982290
Lusitano Mortgage nr 6- Classe A
Lusitano Mortgage nr 6- Classe B
XS0869315241
XS0877741479
XS0888530911
XS0897950878
XS0972653132
XS1031115014
XS1034421419
XS1038896426
XS1042343308
XS1053939978
XS1055501974
XS1058257905
XS0439764191
XS0723597398
BES Luxembourg 3.5% 02/01/43
BES Luxembourg 3.5% 23/01/43
BES Luxembourg 3.5% 19/02/2043
BES Luxembourg 3.5% 18/03/2043
BES Luxembourg ZC
Banco Esp San Lux ZC 12/02/49
Banco Esp San Lux ZC 19/02/49
Banco Esp San Lux ZC 27/02/51
BES Luxembourg ZC 06/03/2051
BES Luxembourg ZC 03/04/48
BES Luxembourg ZC 09/04/52
BES Luxembourg ZC 16/04/46
EMTN 57
EMTN 114
Euro Medium Term Notes
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB Finance
NB Finance
Subordinated debt
a) Date of the next call option
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
2007
2007
2013
2013
2013
2013
2013
2014
2014
2014
2014
2014
2014
2014
2009
2011
0.23
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
37 877
1 500
2031 a)
2031 a)
Euribor 3M + 0.40%
Euribor 3M + 0.60%
Ireland
Ireland
2043
2043
2043
2043
2048
2049
2049
2051
2051
2048
2052
2046
2044
2021
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Fixed rate 6%
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
42 287
97 153
63 183
46 521
36 398
45 717
40 220
34 848
15 212
43 649
38 646
11 477
1 782
1 773
973 477
NOVO BANCO
PTNOBFOM0017 NB 06/07/2028
EUR
2018
100.00
415 234
2023 a)
8.5%
XDUB
The residual duration of debt securities issued and subordinated liabilities, as at 31 December 2021 and 2020, is as follows:
247
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 85 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The main characteristics of these liabilities, as at 31 December 2021 and 2020, are as follows:
The main characteristics of these liabilities, as at 31 December 2021 and 2020, are as follows:
Entity
Entity
ISIN
ISIN
Description
Description
Currency
Currency
Issue date
Issue date
Maturity
Maturity
Interest rate
Interest rate
Market
Market
31.12.2021
31.12.2021
Unit Price
Carrying
Unit Price
(€)
Book value
Carrying
(€)
Book value
(in thousands of Euros)
(in thousands of Euros)
Bonds
Bonds
Lusitano Mortgage nº 6
XS0312981649
Lusitano Mortgage nr 6- Classe A
Lusitano Mortgage nº 6
Lusitano Mortgage nº 6
XS0312981649
XS0312982290
Lusitano Mortgage nr 6- Classe A
Lusitano Mortgage nr 6- Classe B
Lusitano Mortgage nº 6
novobanco
XS0312982290
PTNOBIOM0014
Lusitano Mortgage nr 6- Classe B
NB 3.5% 23/07/24 OBRG.
novobanco
novobanco
novobanco
Euro Medium Term Notes
Euro Medium Term Notes
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
2007
2007
2007
2021
2007
2021
2021
2021
2013
2013
2013
2013
2013
2013
2013
2013
2013
2014
2013
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2009
2014
2009
2018
2018
0.20
1.00
0,20
100.00
1,00
100.00
100,00
100,00
31 767
1 500
31 767
303 571
1 500
270 017
303 571
270 017
2025 a)
Euribor 3M + 0.40%
2035 a)
2025 a)
Euribor 3M + 0.60%
Euribor 3M + 0.40%
2024
2035 a)
Fixed rate 3.5%
Euribor 3M + 0.60%
2022 a)
2024
Euribor 3M + 4.25%
Fixed rate 3.5%
2022 a)
Euribor 3M + 4.25%
1.00
1.00
1,00
1.00
1,00
1.00
1,00
1.00
1,00
1.00
1,00
1.00
1,00
1.00
1,00
1.00
1,00
1.00
1,00
1.00
1,00
1.00
1,00
1.00
1,00
1,00
42 807
98 081
42 807
63 952
98 081
47 063
63 952
33 649
47 063
40 947
33 649
11 375
40 947
15 602
11 375
10 974
15 602
37 479
10 974
36 512
37 479
7 192
36 512
1 820
7 192
1 820
2043
2043
2043
2043
2043
2043
2043
2048
2043
2049
2048
2049
2049
2051
2049
2051
2048
2052
2046
2044
2051
2051
2048
2052
2046
2044
100.00
100,00
415 394
2023 a)
415 394
1 469 702
1 469 702
2023 a)
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Zero Coupon
Fixed rate 3.5%
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
8.50%
8,50%
XDUB
XDUB
XDUB
XDUB
XDUB
XDUB
XDUB
XDUB
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XDUB
XDUB
PTNOBIOM0014
PTNOBJOM0005 NB 4.25% 09/23 OBRG.
NB 3,5% 23/07/24 OBRG.
PTNOBJOM0005 NB 4,25% 09/23 OBRG.
XS0869315241
BES Luxembourg 3.5% 02/01/43
XS0869315241
XS0877741479
BES Luxembourg 3.5% 02/01/43
BES Luxembourg 3.5% 23/01/43
XS0877741479
XS0888530911
XS0888530911
XS0897950878
XS0897950878
XS0972653132
XS0972653132
XS1031115014
XS1031115014
XS1034421419
XS1034421419
XS1038896426
XS1042343308
XS1053939978
XS1055501974
XS1058257905
XS0439764191
XS1038896426
XS1042343308
XS1053939978
XS1055501974
XS1058257905
XS0439764191
BES Luxembourg 3.5% 23/01/43
BES Luxembourg 3.5% 19/02/2043
BES Luxembourg 3.5% 19/02/2043
BES Luxembourg 3.5% 18/03/2043
BES Luxembourg 3.5% 18/03/2043
BES Luxembourg ZC
BES Luxembourg ZC
Banco Esp San Lux ZC 12/02/49
Banco Esp San Lux ZC 12/02/49
Banco Esp San Lux ZC 19/02/49
Banco Esp San Lux ZC 19/02/49
Banco Esp San Lux ZC 27/02/51
BES Luxembourg ZC 06/03/2051
Banco Esp San Lux ZC 27/02/51
BES Luxembourg ZC 03/04/48
BES Luxembourg ZC 06/03/2051
BES Luxembourg ZC 09/04/52
BES Luxembourg ZC 03/04/48
BES Luxembourg ZC 16/04/46
BES Luxembourg ZC 09/04/52
EMTN 57
BES Luxembourg ZC 16/04/46
EMTN 57
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
NB Finance
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
NB Finance
Subordinated debt
NOVO BANCO
NOVO BANCO
PTNOBFOM0017 NB 06/07/2028
PTNOBFOM0017 NB 06/07/2028
a) Date of the next call option
a) Date of the next call option
Subordinated debt
Entity
Entity
Bonds
ISIN
ISIN
Description
Description
Currency
Issue date
Currency
Issue date
31.12.2020
Unit Price
(€)
Unit Price
(€)
31.12.2020
Carrying
Book value
Carrying
Book value
(in thousands of Euros)
(in thousands of Euros)
Maturity
Interest rate
Market
Maturity
Interest rate
Market
Bonds
Lusitano Mortgage nº 6
Lusitano Mortgage nº 6
Lusitano Mortgage nº 6
Lusitano Mortgage nº 6
Euro Medium Term Notes
Euro Medium Term Notes
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB Finance
NB Finance
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB (Luxemburgo Branch)
NB Finance
NB Finance
Subordinated debt
XS0312981649
XS0312982290
XS0312981649
XS0312982290
Lusitano Mortgage nr 6- Classe A
Lusitano Mortgage nr 6- Classe B
Lusitano Mortgage nr 6- Classe A
Lusitano Mortgage nr 6- Classe B
XS0869315241
XS0877741479
XS0888530911
XS0897950878
XS0972653132
XS1031115014
XS1034421419
XS1038896426
XS1042343308
XS1053939978
XS1055501974
XS1058257905
XS0439764191
XS0723597398
XS0869315241
XS0877741479
XS0888530911
XS0897950878
XS0972653132
XS1031115014
XS1034421419
XS1038896426
XS1042343308
XS1053939978
XS1055501974
XS1058257905
XS0439764191
XS0723597398
BES Luxembourg 3.5% 02/01/43
BES Luxembourg 3.5% 23/01/43
BES Luxembourg 3.5% 19/02/2043
BES Luxembourg 3.5% 02/01/43
BES Luxembourg 3.5% 18/03/2043
BES Luxembourg 3.5% 23/01/43
BES Luxembourg ZC
BES Luxembourg 3.5% 19/02/2043
Banco Esp San Lux ZC 12/02/49
BES Luxembourg 3.5% 18/03/2043
Banco Esp San Lux ZC 19/02/49
BES Luxembourg ZC
Banco Esp San Lux ZC 27/02/51
Banco Esp San Lux ZC 12/02/49
BES Luxembourg ZC 06/03/2051
Banco Esp San Lux ZC 19/02/49
BES Luxembourg ZC 03/04/48
Banco Esp San Lux ZC 27/02/51
BES Luxembourg ZC 09/04/52
BES Luxembourg ZC 06/03/2051
BES Luxembourg ZC 16/04/46
BES Luxembourg ZC 03/04/48
EMTN 57
BES Luxembourg ZC 09/04/52
EMTN 114
BES Luxembourg ZC 16/04/46
EMTN 57
EMTN 114
NOVO BANCO
Subordinated debt
PTNOBFOM0017 NB 06/07/2028
NOVO BANCO
PTNOBFOM0017 NB 06/07/2028
a) Date of the next call option
a) Data da próxima call option
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
2007
2007
2007
2007
2013
2013
2013
2013
2013
2013
2013
2013
2014
2013
2014
2013
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2009
2014
2011
2014
2009
2011
2018
2018
0.23
1.00
0,24
1,00
1.00
1.00
1.00
1,00
1.00
1,00
1.00
1,00
1.00
1,00
1.00
1,00
1.00
1,00
1.00
1,00
1.00
1,00
1.00
1,00
1.00
1,00
1.00
1,00
1.00
1,00
1,00
0,91
37 877
1 500
37 877
1 500
42 287
97 153
63 183
42 287
46 521
97 153
36 398
63 183
45 717
46 521
40 220
36 398
34 848
45 717
15 212
40 220
43 649
34 848
38 646
15 212
11 477
43 649
1 782
38 646
1 773
11 477
1 782
1 773
2031 a)
2031 a)
2031 a)
2031 a)
Euribor 3M + 0.40%
Euribor 3M + 0.60%
Euribor 3M + 0,40%
Euribor 3M + 0,60%
Ireland
Ireland
Ireland
Ireland
2043
2043
2043
2043
2048
2049
2049
2051
2051
2048
2052
2046
2044
2021
2043
2043
2043
2043
2048
2049
2049
2051
2051
2048
2052
2046
2044
2021
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Zero Coupon
Fixed rate 3.5%
Zero Coupon
Fixed rate 3.5%
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Fixed rate 6%
Zero Coupon
Zero Coupon
Fixed rate 6%
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
100.00
415 234
2023 a)
8.5%
XDUB
100,00
415 234
973 477
2023 a)
8.5%
XDUB
973 477
Debt securities issued
From 3 months to 1 year
From 1 to 5 years
More than 5 years
Subordinated debt
From 1 to 5 years
Financial liabilities associated to transferred assets
Undetermined maturity
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Fair value attributable to credit risk at the beginning of the exercise
Recognized in other comprehensive income
Changes through other comprehensive income
Variation due to debt repurchases
Fair value attributable to credit risk at the end of the exercise
(in thousands of Euros)
31.12.2021
31.12.2020
270 017
335 338
448 953
1 054 308
415 394
415 394
44 451
44 451
1 514 153
-
1 773
556 470
558 243
415 234
415 234
44 451
44 451
1 017 928
- 85 -
- 84 -
(in thousands Euros)
31.12.2021
31.12.2020
-
-
-
-
47 935
10 883
( 58 818)
-
The residual duration of debt securities issued and subordinated liabilities, as at 31 December 2021 and
2020, is as follows:
The residual duration of debt securities issued and subordinated liabilities, as at 31 December 2021 and 2020, is as follows:
The residual duration of debt securities issued and subordinated liabilities, as at 31 December 2021 and 2020, is as follows:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The component of fair value attributable to the credit risk of debt issue at fair value through profit or
loss, is as follows:
The component of fair value attributable to the credit risk of debt issue at fair value through profit or loss, is as follows:
The change in fair value attributable to changes in the credit risk of the issues is calculated using the credit spread observed in recent
issues of similar debt, adjusted for subsequent changes in the credit spread of the senior debt CDS issued by Group entities. As of
January 1, 2018, in accordance with IFRS 9, this liability component is reflected in Other comprehensive income. With the redemption
in 2020 of the issue recorded at fair value through profit or loss, the Group no longer has associated credit risk. However, the credit
risk recognized since 1 January 2018 in the amount of Euro 9,214 thousand, was fixed in the respective credit risk reserve caption,
in accordance with IFRS 9 (see Note 37).
248
The Group did not present capital or interest defaults on its debt issued in the financial years of 2021 and 2020.
NOTE 34 – PROVISIONS
As at 31 December 2021 and 2020, the caption Provisions presents the following changes:
Balance as at 31 December 2019
Charge / (Write-back)
Utilization
Foreign exchange differences and other (a)
Balance as at 31 December 2020
Charge / (Write-back)
Utilization
Foreign exchange differences and other
Balance as at 31 December 2021
Restructuring
provision
Provision for
guarantees and
commitments
Commercial
Offers
Other
provisions
Total
(in thousands of Euros)
24 044
123 915
( 42 188)
( 8 798)
96 973
10 070
( 60 358)
1
46 686
97 086
22 116
( 2 188)
( 15 028)
101 986
( 9 840)
-
190
92 336
41 334
( 629)
( 29 506)
11 199
( 10 205)
-
-
-
994
145 353
41 021
( 16 578)
4 428
174 224
127 605
( 23 373)
24 362
302 818
307 817
186 423
( 90 460)
( 19 398)
384 382
127 835
( 93 936)
24 553
442 834
(a) Includes Euro 8,798 thousand of restructuring provisions and Euro 14,420 thousand of provisions for guarantees provided by the Spanish Branch transferred to discontinued operations.
In order to meet the financial needs of its customers, the Group assumes several irrevocable commitments and contingent liabilities,
consisting of financial guarantees, letters of credit and other credit commitments, which may require the payment by the Group, on
behalf of its customers, in the event of specific, contractually prescribed events. Although these commitments are not recorded on
the balance sheet, they carry credit risk and, therefore, are part of the Group's overall risk exposure.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 85 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Debt securities issued
From 3 months to 1 year
From 1 to 5 years
More than 5 years
Subordinated debt
From 1 to 5 years
Financial liabilities associated to transferred assets
Undetermined maturity
(in thousands of Euros)
31.12.2021
31.12.2020
270 017
335 338
448 953
1 054 308
415 394
415 394
44 451
44 451
-
1 773
556 470
558 243
415 234
415 234
44 451
44 451
1 514 153
1 017 928
The component of fair value attributable to the credit risk of debt issue at fair value through profit or loss, is as follows:
(in thousands Euros)
31.12.2021
31.12.2020
-
-
-
-
47 935
10 883
( 58 818)
-
Fair value attributable to credit risk at the beginning of the exercise
Recognized in other comprehensive income
Changes through other comprehensive income
Variation due to debt repurchases
The change in fair value attributable to changes in the credit risk of the issues is calculated using the
credit spread observed in recent issues of similar debt, adjusted for subsequent changes in the credit
spread of the senior debt CDS issued by Group entities. As of January 1, 2018, in accordance with IFRS
9, this liability component is reflected in Other comprehensive income. With the redemption in 2020
of the issue recorded at fair value through profit or loss, the Group no longer has associated credit risk.
However, the credit risk recognized since 1 January 2018 in the amount of Euro 9,214 thousand, was
fixed in the respective credit risk reserve caption, in accordance with IFRS 9 (see Note 37).
Fair value attributable to credit risk at the end of the exercise
The change in fair value attributable to changes in the credit risk of the issues is calculated using the credit spread observed in recent
issues of similar debt, adjusted for subsequent changes in the credit spread of the senior debt CDS issued by Group entities. As of
January 1, 2018, in accordance with IFRS 9, this liability component is reflected in Other comprehensive income. With the redemption
in 2020 of the issue recorded at fair value through profit or loss, the Group no longer has associated credit risk. However, the credit
risk recognized since 1 January 2018 in the amount of Euro 9,214 thousand, was fixed in the respective credit risk reserve caption,
in accordance with IFRS 9 (see Note 37).
The Group did not present capital or interest defaults on its debt issued in the financial years of 2021
and 2020.
The Group did not present capital or interest defaults on its debt issued in the financial years of 2021 and 2020.
NOTE 34 – PROVISIONS
NOTE 34 – PROVISIONS
As at 31 December 2021 and 2020, the caption Provisions presents the following changes:
As at 31 December 2021 and 2020, the caption Provisions presents the following changes:
Balance as at 31 December 2019
Charge / (Write-back)
Utilization
Foreign exchange differences and other (a)
Balance as at 31 December 2020
Charge / (Write-back)
Utilization
Foreign exchange differences and other
Balance as at 31 December 2021
Restructuring
provision
Provision for
guarantees and
commitments
Commercial
Offers
Other
provisions
Total
(in thousands of Euros)
24 044
123 915
( 42 188)
( 8 798)
96 973
10 070
( 60 358)
1
46 686
97 086
22 116
( 2 188)
( 15 028)
101 986
( 9 840)
-
190
92 336
41 334
( 629)
( 29 506)
-
11 199
-
( 10 205)
-
994
145 353
41 021
( 16 578)
4 428
174 224
127 605
( 23 373)
24 362
302 818
307 817
186 423
( 90 460)
( 19 398)
384 382
127 835
( 93 936)
24 553
442 834
(a) Includes Euro 8,798 thousand of restructuring provisions and Euro 14,420 thousand of provisions for guarantees provided by the Spanish Branch transferred to discontinued operations.
In order to meet the financial needs of its customers, the Group assumes several irrevocable commitments and contingent liabilities,
consisting of financial guarantees, letters of credit and other credit commitments, which may require the payment by the Group, on
behalf of its customers, in the event of specific, contractually prescribed events. Although these commitments are not recorded on
the balance sheet, they carry credit risk and, therefore, are part of the Group's overall risk exposure.
In order to meet the financial needs of its customers, the Group assumes several irrevocable
commitments and contingent liabilities, consisting of financial guarantees, letters of credit and other
credit commitments, which may require the payment by the Group, on behalf of its customers, in the
event of specific, contractually prescribed events. Although these commitments are not recorded on
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
the balance sheet, they carry credit risk and, therefore, are part of the Group’s overall risk exposure.
The changes in the caption provisions for guarantees, are detailed as follows:
- 86 -
249
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The changes in the caption provisions for guarantees, are detailed as follows:
(in thousands of Euros)
The changes in the caption provisions for guarantees, are detailed as follows:
Stage 1
Stage 2
Stage 3
Total
3249
Balance as at 31 December 2020
Balance as at 31 December 2019
Balance as at 31 December 2019
14 098
(in thousands of Euros)
93 934
Total
Increases due to changes in credit risk
44 897
Decreases due to changes in credit risk
( 29 457)
93 934
Utilised
( 2 188)
Increases due to changes in credit risk
44 897
Other movements (a)
( 15 023)
Decreases due to changes in credit risk
( 29 457)
92 163
Utilised
( 2 188)
Increases due to changes in credit risk
18 764
Other movements (a)
( 15 023)
Decreases due to changes in credit risk
( 31 517)
92 163
189
Other movements
18 764
Increases due to changes in credit risk
79 599
( 31 517)
Decreases due to changes in credit risk
(a) Includes Euro 14,420 thousand of provisions for guarantees provided by the Spanish Branch transferred to discontinued operations (Euro 2,360 thousand on stage 1 and Euro 12,060 thousand
189
Other movements
euros on stage 3).
20 502
( 12 830)
14 098
-
20 502
2 299
( 12 830)
24 069
-
3 044
2 299
( 17 833)
24 069
( 2 361)
3 044
6 919
( 17 833)
( 2 361)
23 309
( 16 000)
76 587
( 2 188)
23 309
( 14 930)
( 16 000)
66 778
( 2 188)
14 847
( 14 930)
( 12 823)
66 778
2 415
14 847
71 217
( 12 823)
2 415
1 086
( 627)
3249
-
1 086
( 2 392)
( 627)
1 316
-
873
( 2 392)
( 861)
1 316
135
873
1 463
( 861)
135
76 587
Balance as at 31 December 2020
Balance as at 31 December 2021
Stage 2
Stage 1
Stage 3
Balance as at 31 December 2021
The changes in the caption provisions for commitments are detailed as follows:
(a) Includes Euro 14,420 thousand of provisions for guarantees provided by the Spanish Branch transferred to discontinued operations (Euro 2,360 thousand on stage 1 and Euro 12,060 thousand
euros on stage 3).
1 463
6 919
71 217
79 599
(in thousands of Euros)
The changes in the caption provisions for commitments are detailed as follows:
The changes in the caption provisions for commitments are detailed as follows:
Stage 1
Stage 2
Stage 3
Total
Balance as at 31 December 2019
1984
1 168
(in thousands of Euros)
3 152
-
Total
Stage 3
Stage 1
Stage 2
Balance as at 31 December 2019
Balance as at 31 December 2020
Balance as at 31 December 2021
Balance as at 31 December 2020
Increases due to changes in credit risk
Decreases due to changes in credit risk
Other movements
Increases due to changes in credit risk
Decreases due to changes in credit risk
Increases due to changes in credit risk
Other movements
Decreases due to changes in credit risk
Other movements
Increases due to changes in credit risk
Decreases due to changes in credit risk
Other movements
12 189
( 5 513)
3 152
( 5)
12 189
9 823
( 5 513)
10 768
( 5)
( 7 855)
9 823
1
10 768
12 737
( 7 855)
1
The restructuring provisions were set up within the scope of the commitments assumed before the European Commission arising
12 737
Balance as at 31 December 2021
from the Group's sale and restructuring process. During the financial year of 2020, a provision of Euro 127.4 million was set up, and
there was also a reversal of the provisions set up in 2016 and 2017 in the amount of Euro 3.4 million. During 2021, a net charge of
10.1 million euros was made and Euro 60.4 million were utilized, so that on December 31, 2021, the amount of restructuring provisions
The restructuring provisions were set up within the scope of the commitments assumed before the European Commission arising
on the balance sheet is Euro 46.7 million.
from the Group's sale and restructuring process. During the financial year of 2020, a provision of Euro 127.4 million was set up, and
there was also a reversal of the provisions set up in 2016 and 2017 in the amount of Euro 3.4 million. During 2021, a net charge of
10.1 million euros was made and Euro 60.4 million were utilized, so that on December 31, 2021, the amount of restructuring provisions
Other provisions amounting to Euro 302.8 million (31 December 2020: Euro 174.2 million), are intended to cover certain identified
on the balance sheet is Euro 46.7 million.
contingencies related to the Group’s activities, the most relevant being:
6 617
( 3 875)
1984
1 093
6 617
5819
( 3 875)
1 933
1 093
( 1 843)
5819
647
1 933
6 556
( 1 843)
647
5 572
( 1 605)
1 168
( 1 131)
5 572
4 004
( 1 605)
6 938
( 1 131)
( 5 979)
4 004
( 734)
6 938
4 229
( 5 979)
( 734)
-
( 33)
-
33
-
-
( 33)
1 897
33
( 33)
-
88
1 897
1 952
( 33)
88
4 229
1 952
6 556
Euro 11.1 million);
• Contingencies associated with legal proceedings amounting to Euro 9.5 million (31 December 2020:
The restructuring provisions were set up within the scope of the commitments assumed before the
European Commission arising from the Group’s sale and restructuring process. During the financial year
of 2020, a provision of Euro 127.4 million was set up, and there was also a reversal of the provisions set
up in 2016 and 2017 in the amount of Euro 3.4 million. During 2021, a net charge of 10.1 million euros was
made and Euro 60.4 million were utilized, so that on December 31, 2021, the amount of restructuring
provisions on the balance sheet is Euro 46.7 million.
Other provisions amounting to Euro 302.8 million (31 December 2020: Euro 174.2 million), are intended
to cover certain identified contingencies related to the Group’s activities, the most relevant being:
• Contingencies associated with ongoing tax processes. To cover for these contingencies, the Group
maintains provisions of Euro 32.2 million (31 December 2020: Euro 29.2million);
• Contingencies associated with sales processes in the amount of Euro 39.3 million (31 December
32.2 million (31 December 2020: Euro 29.2million);
Contingencies associated with ongoing tax processes. To cover for these contingencies, the Group maintains provisions of Euro
Other provisions amounting to Euro 302.8 million (31 December 2020: Euro 174.2 million), are intended to cover certain identified
contingencies related to the Group’s activities, the most relevant being:
Contingencies associated with legal proceedings amounting to Euro 9.5 million (31 December 2020: Euro 11.1 million);
Contingencies associated with ongoing tax processes. To cover for these contingencies, the Group maintains provisions of Euro
Contingencies associated with sales processes in the amount of Euro 39.3 million (31 December 2020: Euro 41.1 million);
32.2 million (31 December 2020: Euro 29.2million);
Contingencies related to the undivided part of the Executive Committee's pension plan, in the amount of Euro 19.2 million (31
Contingencies associated with legal proceedings amounting to Euro 9.5 million (31 December 2020: Euro 11.1 million);
December 2020: Euro 19.2 million), transferred from the liability items net of the value of the assets of the Pension Fund (see Note
Contingencies associated with sales processes in the amount of Euro 39.3 million (31 December 2020: Euro 41.1 million);
17);.
Contingencies related to the undivided part of the Executive Committee's pension plan, in the amount of Euro 19.2 million (31
The remaining amount, of Euro 202.6 million (31 December 2020: Euro 73.6 million), is intended to cover losses arising from the
December 2020: Euro 19.2 million), transferred from the liability items net of the value of the assets of the Pension Fund (see Note
Group's activity, such as fraud, theft and robbery and lawsuits ongoing lawsuits for contingencies related to asset sale processes,
17);.
among others.
2020: Euro 41.1 million);
The remaining amount, of Euro 202.6 million (31 December 2020: Euro 73.6 million), is intended to cover losses arising from the
The increase occurred in 2021 results from the State Budget Law for 2021 ("LOE 21"), which amended the rules of the Property
Group's activity, such as fraud, theft and robbery and lawsuits ongoing lawsuits for contingencies related to asset sale processes,
Transfer Tax Code ("IMT") and the Municipal Property Tax ("IMI"), with the extension of the scope of the aggravated rate of IMI and
among others.
IMT, and loss of exemptions, to real estate owned by taxpayers that are controlled, directly or indirectly, by an entity that is subject to
a more favorable tax regime, included in the list approved by the Minister of Finance.
The increase occurred in 2021 results from the State Budget Law for 2021 ("LOE 21"), which amended the rules of the Property
At this date is pending clarification, as per the request for binding information made to the Tax Authority, the breadth of application of
Transfer Tax Code ("IMT") and the Municipal Property Tax ("IMI"), with the extension of the scope of the aggravated rate of IMI and
IMT, and loss of exemptions, to real estate owned by taxpayers that are controlled, directly or indirectly, by an entity that is subject to
these new rules in terms of subjection to novobanco.
a more favorable tax regime, included in the list approved by the Minister of Finance.
At this date is pending clarification, as per the request for binding information made to the Tax Authority, the breadth of application of
• Contingencies related to the undivided part of the Executive Committee’s pension plan, in the
amount of Euro 19.2 million (31 December 2020: Euro 19.2 million), transferred from the liability
items net of the value of the assets of the Pension Fund (see Note 17);.
• The remaining amount, of Euro 202.6 million (31 December 2020: Euro 73.6 million), is intended to
cover losses arising from the Group’s activity, such as fraud, theft and robbery and lawsuits ongoing
lawsuits for contingencies related to asset sale processes, among others.
250
these new rules in terms of subjection to novobanco.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 86 -
- 86 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
At December 31, 2021, based on the opinions obtained from legal and tax experts, and as a result of internal evaluation, it is not
At December 31, 2021, based on the opinions obtained from legal and tax experts, and as a result of internal evaluation, it is not
considered possible, with complete assurance, to remove the doubt as to the application of the new rules referred to above, although
considered possible, with complete assurance, to remove the doubt as to the application of the new rules referred to above, although
it is admitted that there may be other interpretations since these are new rules, not yet applied, and therefore subject to interpretation.
it is admitted that there may be other interpretations since these are new rules, not yet applied, and therefore subject to interpretation.
As of this date, the calculation of the application of the increased IMI rates to all the properties directly and indirectly owned by
As of this date, the calculation of the application of the increased IMI rates to all the properties directly and indirectly owned by
novobanco amounts to approximately Euro 115.8 million for 2021, and there is no expectation as to the date on which clarification
novobanco amounts to approximately Euro 115.8 million for 2021, and there is no expectation as to the date on which clarification
will be obtained from the Tax Authority or other similar entity that will determine the existence or not of an effective increase in liabilities
will be obtained from the Tax Authority or other similar entity that will determine the existence or not of an effective increase in liabilities
for novobanco. Accordingly, in December 2021 a provision was set up for this contingency with a more probable risk than not of an
for novobanco. Accordingly, in December 2021 a provision was set up for this contingency with a more probable risk than not of an
outflow of resources incorporating economic benefits, in the above-mentioned amount of Euro 115.8 million, which is included in
outflow of resources incorporating economic benefits, in the above-mentioned amount of Euro 115.8 million, which is included in
Other provisions.
Other provisions.
NOTE 35 – OTHER LIABILITIES
NOTE 35 – OTHER LIABILITIES
As at 31 December 2021 and 2020, the caption Other liabilities is analyzed as follows:
As at 31 December 2021 and 2020, the caption Other liabilities is analyzed as follows:
Public sector
Public sector
Creditors for supply of goods
Creditors for supply of goods
Other creditors
Non-controlling interests of Open Investment Funds (see Note 37)
Career bonuses (see Note 17)
Retirement pensions and health-care benefits (see Note 17)
Other accrued expenses
Deferred income
Foreign exchange transactions pending settlement
Other transactions pending settlement
Other creditors
Non-controlling interests of Open Investment Funds (see Note 37)
Career bonuses (see Note 17)
Retirement pensions and health-care benefits (see Note 17)
Other accrued expenses
Deferred income
Foreign exchange transactions pending settlement
Other transactions pending settlement
(in thousands of Euros)
(in thousands of Euros)
31.12.2021
31.12.2020
31.12.2021
31.12.2020
38 017
59 323
107 898
90 181
7 467
22 944
76 333
2 077
14
39 183
34 658
38 017
58 793
59 323
64 412
107 898
90 181
90 206
7 591
7 467
27 052
22 944
75 495
76 333
2 077
2 175
-
14
57 380
39 183
34 658
58 793
64 412
90 206
7 591
27 052
75 495
2 175
-
57 380
As at 31 December 2021, the caption Creditors for supply of goods includes Euro 38,673 thousand
related to creditors of assets for right of use, under IFRS 16 (31 December 2020: Euro 39,826 thousand),
As at 31 December 2021, the caption Creditors for supply of goods includes Euro 38,673 thousand related to creditors of assets for
As at 31 December 2021, the caption Creditors for supply of goods includes Euro 38,673 thousand related to creditors of assets for
whose residual maturities present the following detail:
right of use, under IFRS 16 (31 December 2020: Euro 39,826 thousand), whose residual maturities present the following detail:
right of use, under IFRS 16 (31 December 2020: Euro 39,826 thousand), whose residual maturities present the following detail:
417 762
443 437
417 762
443 437
As at 31 December 2021, the Bank's share capital of Euro 6,054,907,314 is represented by 9,954,907,311 registered shares with
no par value and is fully subscribed and paid up by the following shareholders (December 31, 2020: share capital of Euro
5,900,000,000 represented by 9,799,999,997 registered shares):
As at 31 December 2021, the Bank's share capital of Euro 6,054,907,314 is represented by 9,954,907,311 registered shares with
no par value and is fully subscribed and paid up by the following shareholders (December 31, 2020: share capital of Euro
5,900,000,000 represented by 9,799,999,997 registered shares):
(in thousands of Euros)
31.12.2020
(in thousands of Euros)
(1) As a result of the agreements entered into between the Resolution Fund and the shareholder Lone Star in the context of the sale of 75% of the share capital of
novobanco, only the Resolution Fund will see its participation diluted with the conversion of the conversion rights, pending the delivery of the shares by the Resolution
Fund to Nani Holdings on December 31, 2021. When such delivery occurs, Nani Holdings' shareholding percentage will increase to 75.00% and the Resolution Fund's to
23.44%.Nani Holdings' economic interest in novobanco remains unchanged at 75%.
(2) In view of the commitments assumed by the Portuguese State before the European Commisson, the Resolution Fund is inhibited from exercising its voting rights.
(1) As a result of the agreements entered into between the Resolution Fund and the shareholder Lone Star in the context of the sale of 75% of the share capital of
novobanco, only the Resolution Fund will see its participation diluted with the conversion of the conversion rights, pending the delivery of the shares by the Resolution
Fund to Nani Holdings on December 31, 2021. When such delivery occurs, Nani Holdings' shareholding percentage will increase to 75.00% and the Resolution Fund's to
23.44%.Nani Holdings' economic interest in novobanco remains unchanged at 75%.
(2) In view of the commitments assumed by the Portuguese State before the European Commisson, the Resolution Fund is inhibited from exercising its voting rights.
31.12.2020
31.12.2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Euros)
(in thousands of Euros)
31.12.2021
31.12.2020
31.12.2021
31.12.2020
234
1 199
16 293
20 947
38 673
80
484
22 194
17 068
234
1 199
16 293
20 947
39 826
38 673
80
484
22 194
17 068
39 826
% Share Capital
% Share Capital
31.12.2021
31.12.2020
31.12.2021
31.12.2020
73.83%
24.61%
1.56%
75.00%
73.83%
25.00%
24.61%
-
1.56%
75.00%
25.00%
-
100.00%
100.00%
100.00%
100.00%
- 87 -
- 87 -
251
The increase occurred in 2021 results from the State Budget Law for 2021 (“LOE 21”), which amended
the rules of the Property Transfer Tax Code (“IMT”) and the Municipal Property Tax (“IMI”), with the
extension of the scope of the aggravated rate of IMI and IMT, and loss of exemptions, to real estate
owned by taxpayers that are controlled, directly or indirectly, by an entity that is subject to a more
favorable tax regime, included in the list approved by the Minister of Finance.
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
At this date is pending clarification, as per the request for binding information made to the Tax Authority,
the breadth of application of these new rules in terms of subjection to novobanco.
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
At December 31, 2021, based on the opinions obtained from legal and tax experts, and as a result of
More than 5 years
internal evaluation, it is not considered possible, with complete assurance, to remove the doubt as
to the application of the new rules referred to above, although it is admitted that there may be other
interpretations since these are new rules, not yet applied, and therefore subject to interpretation. As
of this date, the calculation of the application of the increased IMI rates to all the properties directly
and indirectly owned by novobanco amounts to approximately Euro 115.8 million for 2021, and there
is no expectation as to the date on which clarification will be obtained from the Tax Authority or other
Ordinary shares
At December 31, 2021, based on the opinions obtained from legal and tax experts, and as a result of internal evaluation, it is not
At December 31, 2021, based on the opinions obtained from legal and tax experts, and as a result of internal evaluation, it is not
similar entity that will determine the existence or not of an effective increase in liabilities for novobanco.
considered possible, with complete assurance, to remove the doubt as to the application of the new rules referred to above, a lthough
considered possible, with complete assurance, to remove the doubt as to the application of the new rules referred to above, a lthough
Accordingly, in December 2021 a provision was set up for this contingency with a more probable risk
it is admitted that there may be other interpretations since these are new rules, not yet applied, and therefore subject to i nterpretation.
it is admitted that there may be other interpretations since these are new rules, not yet applied, and therefore subject to i nterpretation.
As of this date, the calculation of the application of the increased IMI rates to all the properties directl y and indirectly owned by
As of this date, the calculation of the application of the increased IMI rates to all the properties directl y and indirectly owned by
than not of an outflow of resources incorporating economic benefits, in the above-mentioned amount
novobanco amounts to approximately Euro 115.8 million for 2021, and there is no expectation as to the date on which clarification
novobanco amounts to approximately Euro 115.8 million for 2021, and there is no expectation as to the date on which clarification
of Euro 115.8 million, which is included in Other provisions.
will be obtained from the Tax Authority or other similar entity that will determine the existence or not of an effective increase in liabilities
will be obtained from the Tax Authority or other similar entity that will determine the existence or not of an effective increase in liabilities
for novobanco. Accordingly, in December 2021 a provision was set up for this contingency with a more probable risk than not of an
for novobanco. Accordingly, in December 2021 a provision was set up for this contingency with a more probable risk than not of an
outflow of resources incorporating economic benefits, in the above-mentioned amount of Euro 115.8 million, which is included in
outflow of resources incorporating economic benefits, in the above-mentioned amount of Euro 115.8 million, which is included in
Other provisions.
Other provisions.
NOTE 35 – OTHER LIABILITIES
NOTE 35 – OTHER LIABILITIES
As at 31 December 2021 and 2020, the caption Other liabilities is analysed as follows:
As at 31 December 2021 and 2020, the caption Other liabilities is analysed as follows:
Nani Holdings, SGPS, SA (1)
Fundo de Resolução (2)
Direcção-Geral do Tesouro e Finanças
As at 31 December 2021 and 2020, the caption Other liabilities is analysed as follows:
NOTE 35 – OTHER LIABILITIES
NOTE 36 – SHARE CAPITAL
Ordinary shares
NOTE 36 – SHARE CAPITAL
Nani Holdings, SGPS, SA (1)
Fundo de Resolução (2)
Direcção-Geral do Tesouro e Finanças
Public sector
Creditors for supply of goods
Other creditors
Non-controlling interests of Open Investment Funds (see Note 37)
Career bonuses (see Note 17)
Retirement pensions and health-care benefits (see Note 17)
Other accrued expenses
Deferred income
Foreign exchange transactions pending settlement
Other transactions pending settlement
Public sector
Creditors for supply of goods
Other creditors
Non-controlling interests of Open Investment Funds (see Note 37)
Career bonuses (see Note 17)
Retirement pensions and health-care benefits (see Note 17)
Other accrued expenses
Deferred income
Foreign exchange transactions pending settlement
Other transactions pending settlement
31.12.2021
38 017
59 323
107 898
90 181
7 467
22 944
76 333
2 077
14
39 183
443 437
34 658
38 017
58 793
59 323
64 412
107 898
90 206
90 181
7 591
7 467
27 052
22 944
75 495
76 333
2 175
2 077
-
14
57 380
39 183
34 658
58 793
64 412
90 206
7 591
27 052
75 495
2 175
-
57 380
417 762
443 437
417 762
As at 31 December 2021, the caption Creditors for supply of goods includes Euro 38,673 thousand related to creditors of assets for
right of use, under IFRS 16 (31 December 2020: Euro 39,826 thousand), whose residual maturities present the following detail:
As at 31 December 2021, the caption Creditors for supply of goods includes Euro 38,673 thousand related to creditors of assets for
right of use, under IFRS 16 (31 December 2020: Euro 39,826 thousand), whose residual maturities present the following detail:
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
NOTE 36 – SHARE CAPITAL
NOTE 36 – SHARE CAPITAL
Ordinary shares
Ordinary shares
(in thousands of Euros)
(in thousands of Euros)
31.12.2021
31.12.2020
31.12.2021
31.12.2020
234
1 199
16 293
20 947
38 673
80
484
22 194
17 068
234
1 199
16 293
20 947
39 826
38 673
80
484
22 194
17 068
39 826
As at 31 December 2021, the Bank's share capital of Euro 6,054,907,314 is represented by 9,954,907,311 registered shares with
As at 31 December 2021, the Bank's share capital of Euro 6,054,907,314 is represented by 9,954,907,311 registered shares with
no par value and is fully subscribed and paid up by the following shareholders (December 31, 2020: share capital of Euro
no par value and is fully subscribed and paid up by the following shareholders (December 31, 2020: share capital of Euro
5,900,000,000 represented by 9,799,999,997 registered shares):
5,900,000,000 represented by 9,799,999,997 registered shares):
Nani Holdings, SGPS, SA (1)
Nani Holdings, SGPS, SA (1)
Resolution Fund (2)
Resolution Fund (2)
Directorate General for the Treasury and Finance
Directorate General for the Treasury and Finance
% Share Capital
% Share Capital
31.12.2021
31.12.2020
31.12.2021
31.12.2020
73.83%
24.61%
1.56%
75.00%
73.83%
25.00%
24.61%
-
1.56%
75.00%
25.00%
-
100.00%
100.00%
100.00%
100.00%
(1) as a result of the agreements celebrated between the Resolution Fund and the shareholder Lone Star in the context of the sale of 75% of the share capital of novobanco, only the
(1) as a result of the agreements celebrated between the Resolution Fund and the shareholder Lone Star in the context of the sale of 75% of the share capital of novobanco, only the
Resolution Fund will see its participation diluted with the conversion of the conversion rights, pending the delivery of the shares by the Resolution Fund to Nani Holdings on December 31,
Resolution Fund will see its participation diluted with the conversion of the conversion rights, pending the delivery of the shares by the Resolution Fund to Nani Holdings on December 31,
2021. When such delivery occurs, Nani Holdings' shareholding percentage will increase to 75.00% and the Resolution Fund's to 23.44%.Nani Holdings' economic interest in the new bank
2021. When such delivery occurs, Nani Holdings' shareholding percentage will increase to 75.00% and the Resolution Fund's to 23.44%.Nani Holdings' economic interest in the new bank
remains unchanged at 75%.
remains unchanged at 75%.
(2) In view of the commitments assumed by the Portuguese Republic before the European Commisson, the Resolution Fund is inhibited from exercising its voting rights.
(2) In view of the commitments assumed by the Portuguese Republic before the European Commisson, the Resolution Fund is inhibited from exercising its voting rights.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 88 -
- 88 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
At December 31, 2021, based on the opinions obtained from legal and tax experts, and as a result of internal evaluation, it is not
considered possible, with complete assurance, to remove the doubt as to the application of the new rules referred to above, a lthough
it is admitted that there may be other interpretations since these are new rules, not yet applied, and therefore subject to i nterpretation.
As of this date, the calculation of the application of the increased IMI rates to all the properties directl y and indirectly owned by
novobanco amounts to approximately Euro 115.8 million for 2021, and there is no expectation as to the date on which clarification
will be obtained from the Tax Authority or other similar entity that will determine the existence or not of an effective increase in liabilities
for novobanco. Accordingly, in December 2021 a provision was set up for this contingency with a more probable risk than not of an
outflow of resources incorporating economic benefits, in the above-mentioned amount of Euro 115.8 million, which is included in
Other provisions.
NOTE 35 – OTHER LIABILITIES
As at 31 December 2021 and 2020, the caption Other liabilities is analysed as follows:
Public sector
Creditors for supply of goods
Other creditors
Non-controlling interests of Open Investment Funds (see Note 37)
Career bonuses (see Note 17)
Retirement pensions and health-care benefits (see Note 17)
Other accrued expenses
Deferred income
Foreign exchange transactions pending settlement
Other transactions pending settlement
As at 31 December 2021, the caption Creditors for supply of goods includes Euro 38,673 thousand related to creditors of assets for
right of use, under IFRS 16 (31 December 2020: Euro 39,826 thousand), whose residual maturities present the following detail:
(in thousands of Euros)
31.12.2021
31.12.2020
38 017
59 323
107 898
90 181
7 467
22 944
76 333
2 077
14
39 183
443 437
34 658
58 793
64 412
90 206
7 591
27 052
75 495
2 175
-
57 380
417 762
(in thousands of Euros)
31.12.2021
31.12.2020
234
1 199
16 293
20 947
38 673
80
484
22 194
17 068
39 826
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
NOTE 36 – SHARE CAPITAL
NOTE 36 – SHARE CAPITAL
Ordinary shares
Ordinary shares
As at 31 December 2021, the Bank’s share capital of Euro 6,054,907,314 is represented by 9,954,907,311
registered shares with no par value and is fully subscribed and paid up by the following shareholders
(December 31, 2020: share capital of Euro 5,900,000,000 represented by 9,799,999,997 registered
shares):
As at 31 December 2021, the Bank's share capital of Euro 6,054,907,314 is represented by 9,954,907,311 registered shares with
no par value and is fully subscribed and paid up by the following shareholders (December 31, 2020: share capital of Euro
5,900,000,000 represented by 9,799,999,997 registered shares):
Nani Holdings, SGPS, SA (1)
Resolution Fund (2)
Directorate General for the Treasury and Finance
% Share Capital
31.12.2021
31.12.2020
73.83%
24.61%
1.56%
75.00%
25.00%
-
100.00%
100.00%
(1) as a result of the agreements celebrated between the Resolution Fund and the shareholder Lone Star in the context of the sale of 75% of the share capital of novobanco, only the
Resolution Fund will see its participation diluted with the conversion of the conversion rights, pending the delivery of the shares by the Resolution Fund to Nani Holdings on December 31,
2021. When such delivery occurs, Nani Holdings' shareholding percentage will increase to 75.00% and the Resolution Fund's to 23.44%.Nani Holdings' economic interest in the new bank
remains unchanged at 75%.
(2) In view of the commitments assumed by the Portuguese Republic before the European Commisson, the Resolution Fund is inhibited from exercising its voting rights.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In December 2021, a capital increase of Euro 154,907 thousand was carried out through the conversion
of the conversion rights (resulting from the Special Regime Applicable to Deferred Tax Assets) for the
year 2015, which gave the State a 1.56% stake in the novobanco, and which resulted in the issuance of
154,907,314 new ordinary shares (Note 37).
In 2017 and following the acquisition of 75% of novobanco by Lone Star, two capital increases in the
amounts of Euro 750 million and Euro 250 million, in October and December, respectively, were realised.
As mentioned in Note 30, novobanco adhered to the Special Regime applicable to Deferred Tax Assets
(DTA) approved by Law No. 61/2014, of 26 August. Said regime applies to deferred tax assets related to
the non-deduction, for corporate income tax purposes, of costs and negative equity changes recorded
up to 31 December 2015 for impairment losses on loans and advances to customers and with employee
post-employment or long-term benefits. Said regime foresees that those assets can be converted into
tax credits when the taxable entity reports an annual net loss.
The conversion of the eligible deferred tax assets into tax credits was made according to the proportion
of the amount of said net loss to total equity at the individual company level. A special reserve was
established with an amount identical to the tax credit approved, increased by 10%. This special reserve
was established using the originating reserve and is to be incorporated in the share capital.
- 88 -
The conversion rights are securities that entitle the State to require novobanco to increase its share
capital by incorporating the amount of the special reserve and consequently issuing and delivering
free of charge ordinary shares. It is estimated that the conversion rights to be issued and attributed
to the State following the negative net results of the years 2015 to 2020 will give it a stake of up to
approximately 16.63% of the share capital of novobanco, which will only dilute, in accordance with the
sale agreement, the stake of the Resolution Fund.
For the years 2016 and 2017, the Tax Authority has already validated the tax credit, and the final amount
of conversion rights attributed to the State represents an additional stake of 4.13% of the share capital
of novobanco (5.69% for the years 2015 to 2017). This conversion will be exercised in accordance with
the procedures and deadlines established in the legal regime. The issuer of these rights has agreed
with the shareholders that clarification will be sought from the State regarding the procedure for the
conversion of these rights. As soon as this clarification is received, the conversion of the rights for the
2016 and 2017 financial years will take place.
252
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
In December 2021, a capital increase of Euro 154,907 thousand was carried out through the conversion of the conversion rights
(resulting from the Special Regime Applicable to Deferred Tax Assets) for the year 2015, which gave the State a 1.56% stake in the
novobanco, and which resulted in the issuance of 154,907,314 new ordinary shares (Note 37).
In 2017 and following the acquisition of 75% of novobanco by Lone Star, two capital increases in the amounts of Euro 750 million
and Euro 250 million, in October and December, respectively, were realised.
As mentioned in Note 30, novobanco adhered to the Special Regime applicable to Deferred Tax Assets (DTA) approved by Law
No. 61/2014, of 26 August. Said regime applies to deferred tax assets related to the non-deduction, for corporate income tax
purposes, of costs and negative equity changes recorded up to 31 December 2015 for impairment losses on loans and advances
to customers and with employee post-employment or long-term benefits. Said regime foresees that those assets can be converted
into tax credits when the taxable entity reports an annual net loss.
The conversion of the eligible deferred tax assets into tax credits was made according to the proportion of the amount of said net
loss to total equity at the individual company level. A special reserve was established with an amount identical to the tax credit
approved, increased by 10%. This special reserve was established using the originating reserve and is to be incorporated in the
share capital.
The conversion rights are securities that entitle the State to require novobanco to increase its share capital by incorporating the
amount of the special reserve and consequently issuing and delivering free of charge ordinary shares. It is estimated that the
conversion rights to be issued and attributed to the State following the negative net results of the years 2015 to 2020 will give it a
stake of up to approximately 16.63% of the share capital of novobanco, which will only dilute, in accordance with the sale
agreement, the stake of the Resolution Fund.
For the years 2016 and 2017, the Tax Authority has already validated the tax credit, and the final amount of conversion rights
attributed to the State represents an additional stake of 4.13% of the share capital of novobanco (5.69% for the years 2015 to
2017). This conversion will be exercised in accordance with the procedures and deadlines established in the legal regime. The
issuer of these rights has agreed with the shareholders that clarification will be sought from the State regarding the procedure for
NOTE 37 – ACCUMULATED OTHER
the conversion of these rights. As soon as this clarification is received, the conversion of the rights for the 2016 and 2017 financial
years will take place.
COMPREHENSIVE INCOME, RETAINED EARNINGS,
OTHER RESERVES NON-CONTROLLING INTERESTS
NOTE 37 – ACCUMULATED OTHER COMPREHENSIVE INCOME, RETAINED EARNINGS, OTHER RESERVES NON-
CONTROLLING INTERESTS
As at 31 December 2021 and 2020, the accumulated other comprehensive income, retained earnings and
other reserves present the following detail:
As at 31 December 2021 and 2020, the accumulated other comprehensive income, retained earnings and other reserves present the
following detail:
Other accumulated comprehensive income
Retained earnings
Other reserves
Originating reserve
Special reserve
Other reserves and Retained earnings
(in thousands of Euros)
31.12.2021
31.12.2020
( 1 045 489)
( 823 420)
( 8 576 860)
( 7 202 828)
6 501 374
1 848 691
701 136
3 951 547
6 570 154
1 976 173
728 561
3 865 420
( 3 120 975)
( 1 456 094)
Other accumulated comprehensive income
The movements in Other accumulated comprehensive income were as follows:
Other accumulated comprehensive income
The movements in Other accumulated comprehensive income were as follows:
Other accumulated comprehensive income
(in thousands of Euros)
Impairment
reserves
Credit risk
reserves
Sales
reserves
Fair value
reserves
Other
variations of
other
comprehensiv
e income
Actuarial
deviations (net of
taxes)
Total
Balance as at 31 December 2019
5 547
( 1 669)
( 7 785)
( 85 891)
( 13 376)
( 599 137)
Actuarial deviations
Fair value changes, net of taxes
Foreign exchange differences
Changes in credit risk of financial liabilities at fair value,
net of taxes
Impairment reserves of securities at fair value through
other comprehensive income
Reserves of sales of securities at fair value through other
-
comprehensive income
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
-
Other comprehensive income of associated companies
10 883
( 1 852)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12 729
-
-
-
( 1 518)
( 124 331)
-
-
-
-
-
-
-
-
-
-
-
-
( 14 972)
-
-
( 2 048)
Balance as at 31 December 2020
3 695
9 214
( 22 757)
( 75 210)
( 14 894)
( 723 468)
Actuarial deviations
Fair value changes, net of taxes
Foreign exchange differences
Impairment reserves of securities at fair value through
other comprehensive income
Reserves of sales of securities at fair value through other
comprehensive income
Other comprehensive income of associated companies
Balance as at 31 December 2021
-
-
-
12
-
-
-
-
-
-
-
-
-
-
-
-
( 20 539)
-
-
( 125 801)
-
-
-
( 252)
-
-
95
-
-
-
( 75 584)
-
-
-
-
-
( 702 311)
( 124 331)
12 729
( 1 518)
10 883
( 1 852)
( 14 972)
( 2 048)
- 88 -
( 823 420)
( 75 584)
( 125 801)
95
12
( 20 539)
( 252)
3 707
9 214
( 43 296)
( 201 263)
( 14 799)
( 799 052)
(1 045 489)
Fair value reserves
The fair value reserves represent the amount of the unrealised gains and losses arising from the securities portfolio classified as at
a fair value through other comprehensive income, net of impairment losses. The amount of this reserve is shown net of deferred
taxes and non-controlling interests.
253
The changes occurred in the fair value reserves, net of deferred taxes and impairment losses may be analysed as follows:
Balance at the beginning of the exercise
28 437
( 103 647)
( 75 210)
Changes in fair value
Foreign exchange differences
Disposals in the exercise
Impairment in the exercise
31.12.2021
Fair value reserves
(in thousands of Euros)
31.12.2020
Fair value reserves
Financial assets at fair
value through other
comprehensive income
Deferred tax
Total fair
reserves
value reserves
Financial assets at fair
value through other
comprehensive income
Deferred tax
Total fair
reserves
value reserves
( 200 897)
2 351
13 560
( 1 361)
-
-
-
-
( 200 897)
2 351
13 560
( 1 361)
60 294
13 057
95 596
( 4 280)
( 69 652)
( 6 284)
-
( 98 948)
-
-
-
-
( 4 699)
( 85 891)
95 596
( 4 280)
( 69 652)
( 6 284)
( 4 699)
Deferred taxes recognized in the exercise in reserves
-
60 294
Balance at the end of the exercise
( 157 910)
( 43 353)
( 201 263)
28 437
( 103 647)
( 75 210)
The fair value reserves are analyzed as follows:
Amortised cost of financial assets at fair value through other comprehensive income
Market value of financial assets at fair value through other comprehensive income
Unrealised gains / (losses) recognized in fair value reserve
Fair value reserves by the equity method
Fair value reserves of discontinued activities
Non-controlling Interests
Total fair value reserve
Deferred Taxes
Fair value reserve attributable to shareholders of the Bank
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of Euros)
31.12.2021
31.12.2020
7 378 362
7 220 996
( 157 366)
665
-
( 1 209)
( 157 910)
( 43 353)
( 201 263)
7 879 863
7 907 587
27 724
917
1 193
( 1 397)
28 437
( 103 647)
( 75 210)
- 89 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Other accumulated comprehensive income
The movements in Other accumulated comprehensive income were as follows:
Other accumulated comprehensive income
The movements in Other accumulated comprehensive income were as follows:
Other accumulated comprehensive income
Other accumulated comprehensive income
variations of
Actuarial
Total
Other
(in thousands of Euros)
(in thousands of Euros)
Impairment
Credit risk
reserves
reserves
Sales
reserves
Fair value
reserves
Impairment
Credit risk
reserves
5 547
reserves
( 1 669)
Sales
reserves
( 7 785)
Fair value
reserves
( 85 891)
5 547
( 1 669)
( 7 785)
other
Other
comprehensiv
variations of
e income
other
comprehensiv
( 13 376)
e income
deviations (net of
taxes)
Actuarial
deviations (net of
taxes)
( 599 137)
( 124 331)
( 599 137)
( 124 331)
10 883
10 883
( 14 972)
3 695
9 214
( 22 757)
( 14 972)
( 14 894)
( 723 468)
3 695
9 214
( 22 757)
( 75 210)
( 125 801)
( 14 894)
Balance as at 31 December 2019
Actuarial deviations
Balance as at 31 December 2019
Fair value changes, net of taxes
Foreign exchange differences
Actuarial deviations
Changes in credit risk of financial liabilities at fair value,
Fair value changes, net of taxes
net of taxes
Foreign exchange differences
Impairment reserves of securities at fair value through
Changes in credit risk of financial liabilities at fair value,
other comprehensive income
Reserves of sales of securities at fair value through other
Impairment reserves of securities at fair value through
net of taxes
comprehensive income
other comprehensive income
Other comprehensive income of associated companies
Reserves of sales of securities at fair value through other
comprehensive income
Balance as at 31 December 2020
Other comprehensive income of associated companies
Actuarial deviations
Balance as at 31 December 2020
Fair value changes, net of taxes
Foreign exchange differences
Actuarial deviations
Impairment reserves of securities at fair value through
Fair value changes, net of taxes
other comprehensive income
Foreign exchange differences
Reserves of sales of securities at fair value through other
Impairment reserves of securities at fair value through
comprehensive income
other comprehensive income
Other comprehensive income of associated companies
Reserves of sales of securities at fair value through other
comprehensive income
Other comprehensive income of associated companies
Balance as at 31 December 2021
Balance as at 31 December 2021
( 1 852)
( 1 852)
-
-
-
-
-
-
-
-
-
12
-
-
-
-
-
-
-
-
-
-
12
-
3 707
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9 214
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
( 20 539)
-
( 85 891)
12 729
12 729
-
-
-
-
-
-
-
-
-
-
-
-
( 2 048)
( 75 210)
-
( 2 048)
( 125 801)
-
-
-
( 252)
-
-
-
-
-
-
-
-
-
-
-
( 13 376)
( 1 518)
( 1 518)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
95
-
-
-
95
-
-
-
-
-
( 43 296)
( 20 539)
-
( 201 263)
-
( 252)
( 14 799)
Total
( 702 311)
( 124 331)
( 702 311)
12 729
( 1 518)
( 124 331)
12 729
10 883
( 1 518)
( 1 852)
10 883
( 14 972)
( 1 852)
( 2 048)
( 823 420)
( 14 972)
( 2 048)
( 75 584)
( 823 420)
( 125 801)
95
( 75 584)
( 125 801)
12
95
( 20 539)
( 252)
12
(1 045 489)
( 20 539)
( 252)
-
-
-
-
-
-
-
-
-
-
-
( 799 052)
-
-
-
-
-
-
-
-
-
-
-
( 75 584)
( 723 468)
( 75 584)
3 707
9 214
( 43 296)
( 201 263)
( 14 799)
( 799 052)
(1 045 489)
Fair value reserves
Fair value reserves
The fair value reserves represent the amount of the unrealised gains and losses arising from the
The fair value reserves represent the amount of the unrealised gains and losses arising from the securities portfolio classified as at
securities portfolio classified as at a fair value through other comprehensive income, net of impairment
a fair value through other comprehensive income, net of impairment losses. The amount of this reserve is shown net of deferre d
losses. The amount of this reserve is shown net of deferred taxes and non-controlling interests.
taxes and non-controlling interests.
Fair value reserves
The fair value reserves represent the amount of the unrealised gains and losses arising from the securities portfolio classified as at
a fair value through other comprehensive income, net of impairment losses. The amount of this reserve is shown net of deferred
taxes and non-controlling interests.
The changes occurred in the fair value reserves, net of deferred taxes and impairment losses may be analysed as follows:
The changes occurred in the fair value reserves, net of deferred taxes and impairment losses may be
analysed as follows:
The changes occurred in the fair value reserves, net of deferred taxes and impairment losses may be analysed as follows:
(in thousands of Euros)
31.12.2021
Fair value reserves
31.12.2020
Fair value reserves
(in thousands of Euros)
Financial assets at fair
value through other
comprehensive income
31.12.2021
Deferred tax
Fair value reserves
reserves
Total fair
value reserves
Financial assets at fair
value through other
comprehensive income
31.12.2020
Deferred tax
Fair value reserves
reserves
Total fair
value reserves
Balance at the beginning of the exercise
Balance at the beginning of the exercise
Changes in fair value
Foreign exchange differences
Disposals in the exercise
Changes in fair value
Impairment in the exercise
Foreign exchange differences
Deferred taxes recognized in the exercise in reserves
Disposals in the exercise
Impairment in the exercise
Deferred taxes recognized in the exercise in reserves
Balance at the end of the exercise
Financial assets at fair
value through other
28 437
comprehensive income
( 200 897)
2 351
28 437
13 560
( 200 897)
( 1 361)
2 351
-
13 560
( 1 361)
-
( 157 910)
Deferred tax
( 103 647)
reserves
-
-
-
-
60 294
( 103 647)
-
-
-
-
60 294
( 43 353)
Total fair
( 75 210)
value reserves
( 200 897)
2 351
( 75 210)
13 560
( 200 897)
( 1 361)
2 351
60 294
13 560
( 1 361)
60 294
( 201 263)
Financial assets at fair
value through other
13 057
comprehensive income
13 057
95 596
( 4 280)
( 69 652)
95 596
( 6 284)
( 4 280)
-
( 69 652)
28 437
( 6 284)
-
Deferred tax
( 98 948)
reserves
Total fair
( 85 891)
value reserves
( 98 948)
-
-
-
-
( 4 699)
-
-
-
-
( 4 699)
( 103 647)
95 596
( 4 280)
( 85 891)
( 69 652)
95 596
( 6 284)
( 4 280)
( 4 699)
( 69 652)
( 6 284)
( 4 699)
( 75 210)
Balance at the end of the exercise
( 157 910)
( 43 353)
( 201 263)
28 437
( 103 647)
( 75 210)
The fair value reserves are analysed as follows:
The fair value reserves are analysed as follows:
The fair value reserves are analyzed as follows:
Amortised cost of financial assets at fair value through other comprehensive income
Market value of financial assets at fair value through other comprehensive income
Amortised cost of financial assets at fair value through other comprehensive income
Unrealised gains / (losses) recognized in fair value reserve
Market value of financial assets at fair value through other comprehensive income
Fair value reserves by the equity method
Unrealised gains / (losses) recognized in fair value reserve
Fair value reserves of discontinued activities
Fair value reserves by the equity method
Non-controlling Interests
Fair value reserves of discontinued activities
Total fair value reserve
Non-controlling Interests
Deferred Taxes
Fair value reserve attributable to shareholders of the Bank
Total fair value reserve
Deferred Taxes
31.12.2021
7 378 362
31.12.2021
7 220 996
7 378 362
( 157 366)
7 220 996
665
( 157 366)
-
665
( 1 209)
( 157 910)
-
( 1 209)
( 43 353)
( 157 910)
( 201 263)
( 43 353)
Fair value reserve attributable to shareholders of the Bank
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
( 201 263)
(in thousands of Euros)
31.12.2020
(in thousands of Euros)
7 879 863
31.12.2020
7 907 587
7 879 863
27 724
7 907 587
917
27 724
1 193
917
( 1 397)
1 193
28 437
( 1 397)
( 103 647)
28 437
( 75 210)
( 103 647)
( 75 210)
- 89 -
- 90 -
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Originating reserve
The originating reserve results from the difference between the assets and liabilities transferred from
BES to novobanco, on the terms defined in the resolution measure applied by Bank of Portugal to BES.
The amount of the reserve includes the effects of Bank of Portugal’s Resolution Measure (“Medida de
Resolução”) and those of the conclusions reached through the audit conducted by the independent
auditor nominated by Bank of Portugal.
Special reserve
As mentioned in Note 30, the special reserve was created as a result of the adhesion of novobanco
to the Special Regime applicable to Deferred Tax Assets approved by Law No. 61/2014, of 26 August,
which implied the conversion of eligible deferred tax assets into tax credits and the simultaneous
establishment of a special reserve.
Following the calculation of a negative net result in the years between 2015 and 2020, with reference
to the deferred tax assets eligible at the closing date of these years, from the application of the special
regime applicable to deferred tax assets, novobanco recorded a special reserve, in the same amount as
the tax credit calculated, increased by 10%, which is broken down as follows:
254
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Originating reserve
The originating reserve results from the difference between the assets and liabilities transferred from BES to novobanco, on the
terms defined in the resolution measure applied by Bank of Portugal to BES. The amount of the reserve includes the effects of Bank
of Portugal’s Resolution Measure (“Medida de Resolução”) and those of the conclusions reached through the audit conducted by the
independent auditor nominated by Bank of Portugal.
Special reserve
As mentioned in Note 30, the special reserve was created as a result of the adhesion of novobanco to the Special Regime applicable
to Deferred Tax Assets approved by Law No. 61/2014, of 26 August, which implied the conversion of eligible deferred tax assets into
tax credits and the simultaneous establishment of a special reserve.
Following the calculation of a negative net result in the years between 2015 and 2020, with reference to the deferred tax assets
eligible at the closing date of these years, from the application of the special regime applicable to deferred tax assets, novobanco
recorded a special reserve, in the same amount as the tax credit calculated, increased by 10%, which is broken down as follows:
2016 (net loss of 2015)
2017 (net loss of 2016)
2018 (net loss of 2017)
2019 (net loss of 2018)
2020 (net loss of 2019)
2021 (net loss of 2020)
(milhares de euros)
31.12.2021
31.12.2020
14 004
109 421
140 332
178 171
122 015
137 193
701 136
168 911
109 421
150 044
178 171
122 014
-
728 561
With regard to the reserve set up in 2016 (relating to the negative net income of 2015), taking into account the legal deadlines provided
for in the Special Regime, in 2021 it was decided to increase the share capital by incorporation of reserves in the amount of Euro
154,907 thousand, with the remaining amount of the reserve in the amount of Euro 14,004 thousand (relating to goodwill), intended
With regard to the reserve set up in 2016 (relating to the negative net income of 2015), taking into
to be incorporated into a special reserve subject to the legal reserve regime under the terms of article 295 of the Commercial
account the legal deadlines provided for in the Special Regime, in 2021 it was decided to increase the
Companies Code.
share capital by incorporation of reserves in the amount of Euro 154,907 thousand, with the remaining
amount of the reserve in the amount of Euro 14,004 thousand (relating to goodwill), intended to be
incorporated into a special reserve subject to the legal reserve regime under the terms of article 295 of
the Commercial Companies Code.
Other reserves and retained earnings
Following the conditions agreed in the novobanco’s sale process, a Contingent Capital Agreement was created. In this context, if
the capital ratios fall below a certain threshold and, cumulatively, losses are recorded in a delimited asset portfolio, the Resolution
Fund makes a payment corresponding to the lower of the losses recorded and the amount necessary to restore the ratios to the
defined threshold, of up to a maximum of Euro 3,890 million (see Note 38 – Contingent liabilities and commitments). The capital
corresponds to a previously defined asset perimeter, with an initial net book value (June 2016) of around Euro 7.9 billion. As at 31
December 2021 these assets had a net value of Euro 1.7 billion, mainly as a result of losses recorded as well as payments and
recoveries (31 December 2020: net value of Euro 2.1 billion).
The amount related to the Contingent Capital Agreement recorded in 2020, as receivable by the
Resolution Fund (Euro 598,312 thousand), differs from the amount paid as a result of disagreements,
between novobanco and the Resolution Fund, regarding (i) the provision for discontinued operations in
Spain and (ii) the valuation of participation units, leading to a limitation to the immediate access to this
amount, which despite being recorded as receivables, the Bank deducted, as at December 31, 2021, to
the regulatory capital calculation (EUR 165,442 thousand). novobanco considers this amount to be
due under the Contingent Capital Agreement and is triggering the legal and contractual mechanisms at
its disposal to ensure receipt of the same (see Note 38). Additionally, the variable remuneration of the
Executive Board of Directors for 2019 and 2020 (Euro 3,857 thousand) was also deducted.
Other reserves and retained earnings
Following the conditions agreed in the novobanco’s sale process, a Contingent Capital Agreement was
created. In this context, if the capital ratios fall below a certain threshold and, cumulatively, losses are
recorded in a delimited asset portfolio, the Resolution Fund makes a payment corresponding to the
lower of the losses recorded and the amount necessary to restore the ratios to the defined threshold,
of up to a maximum of Euro 3,890 million (see Note 38 – Contingent liabilities and commitments). The
capital corresponds to a previously defined asset perimeter, with an initial net book value (June 2016)
of around Euro 7.9 billion. As at 31 December 2021 these assets had a net value of Euro 1.7 billion, mainly
as a result of losses recorded as well as payments and recoveries (31 December 2020: net value of Euro
2.1 billion).
Taking into consideration the losses presented by novobanco at December 31, 2020, 2019, 2018 and 2017, the conditions were met
that determined the payment by the Resolution Fund of Euro 429,013 thousand, Euro 1,035,016 thousand, Euro 1,149,295 thousand
and Euro 791,695 thousand in 2021, 2020, 2019 and 2018, respectively.
In 2021 an amount receivable by the Resolution Fund of Euro 209,220 thousand was recorded in relation
to the Contingent Capital Agreement, under Other Reserves and which results, on the date of each
balance sheet, from losses incurred and regulatory ratios in force at the time of their determination. As
a result of the above and in line with the Regulator’s guidelines, at 31 December 2021, this value was
also deducted from the regulatory capital calculation.
The amount related to the Contingent Capital Agreement recorded in 2020, as receivable by the Resolution Fund (Euro 598,312
thousand), differs from the amount paid as a result of disagreements, between novobanco and the Resolution Fund, regarding (i)
the provision for discontinued operations in Spain and (ii) the valuation of participation units, leading to a limitation to the immediate
access to this amount, which despite being recorded as receivables, the Bank deducted, as at December 31, 2021, to the regulatory
capital calculation (EUR 165,442 thousand). novobanco considers this amount to be due under the Contingent Capital Agreement
and is triggering the legal and contractual mechanisms at its disposal to ensure receipt of the same (see Note 38). Additionally, the
variable remuneration of the Executive Board of Directors for 2019 and 2020 (Euro 3,857 thousand) was also deducted.
Non-controlling interests
The caption Non-controlling interests, by subsidiary, is detailed as follows:
Taking into consideration the losses presented by novobanco at December 31, 2020, 2019, 2018 and
2017, the conditions were met that determined the payment by the Resolution Fund of Euro 429,013
thousand, Euro 1,035,016 thousand, Euro 1,149,295 thousand and Euro 791,695 thousand in 2021,
2020, 2019 and 2018, respectively.
Non-controlling interests
The caption Non-controlling interests, by subsidiary, is detailed as follows:
In 2021 an amount receivable by the Resolution Fund of Euro 209,220 thousand was recorded in relation to the Contingent Capital
Agreement, under Other Reserves and which results, on the date of each balance sheet, from losses incurred and regulatory ratios
in force at the time of their determination. As a result of the above and in line with the Regulator's guidelines, at 31 December 2021,
this value was also deducted from the regulatory capital calculation.
NB Património a)
novobanco Açores
Amoreiras
Other
(in thousands of Euros)
Balance sheet
-
20 445
9 012
1 578
31 035
31.12.2021
Income
statement
6 007
2 053
( 87)
( 288)
7 685
% Non-
controlling
interests
43,67%
42,47%
4,76%
Balance sheet
-
18 451
9 099
4 496
32 046
31.12.2020
Income
statement
( 7 759)
1 134
( 123)
( 3 326)
( 10 074)
% Non-
controlling
interests
44,17%
42,47%
4,76%
a) Non-controlling interests relating to Open real estate investment funds are recorded as Other liabilities (see Note 33)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 90 -
The changes occurred in the caption Non-controlling interests may be analyzed as follows:
NOTE 38 – CONTINGENT LIABILITIES AND COMMITMENTS
In addition to the derivative financial instruments, the balances relating to off-balance accounts as at 31 December 2021 and 2020
are the following:
Non-controlling interests at the beginning of the exercise
Changes in consolidation perimeter and control percentages
Changes in fair value reserves
Other
Net profit / (loss) for the exercise
Non-controlling interests at the end of the exercise
Contingent liabilities
Guarantees and standby letters
Financial assets pledged as collateral
Open documentary credits
Commitments
Revocable commitments
Irrevocable commitments
255
(in thousands of Euros)
31.12.2021
31.12.2020
32 046
( 3 288)
142
( 5 550)
7 685
31 035
36 624
( 1 553)
( 830)
7 879
( 10 074)
32 046
(in thousands of Euros)
31.12.2021
31.12.2020
2 234 243
13 997 048
402 332
16 666 552
5 298 799
546 458
5 845 257
2 826 190
14 101 034
410 292
17 337 516
6 389 435
631 500
7 020 935
Guarantees and standby letters provided are banking operations that do not imply any mobilization of funds for the Group.
As at 31 December 2021, the caption financial assets pledged as collateral includes:
The market value of financial assets pledged as collateral to the European Central Bank in the scope of a liquidity facility, in the
amount of Euro 13.2 billion (31 December 2020: Euro 13.1 billion);
Securities pledged as collateral to the Portuguese Securities and Exchange Commission (“Comissão do Mercado de Valores
Mobiliários” (CMVM)) in the scope of the Investors Indemnity System (“Sistema de Indemnização aos Investidores”), in the amount
of Euro 9.1 million (31 December 2020: Euro 9.4 million);
Securities pledged as collateral to the Deposits’ Guarantee Fund (“Fundo de Garantia de Depósitos”), in the amount of Euro 67.5
Securities pledged as collateral to the European Investment Bank, in the amount of Euro 651.4 million (31 December 2020: Euro
Securities delivered as collateral in connection with derivatives trading with a central counterparty in the amount of Euro 100.5
million (31 December 2020: Euro 70.8 million);
769.7 million);
million (31 December 2020: Euro 107.0 million).
The above mentioned financial assets pledged as collateral are recorded in the various asset categories of the Group’s balance sheet
and may be executed in the event the Group does not fulfil its obligations under the terms and conditions of the contracts celebrated.
The increase in the value of securities pledged as collateral to the European Investment Bank is related to the reinforcement of the
collateral due to changes in the minimum required amounts.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Non-controlling interests
The caption Non-controlling interests, by subsidiary, is detailed as follows:
Non-controlling interests
The caption Non-controlling interests, by subsidiary, is detailed as follows:
Balance sheet
controlling
Balance sheet
31.12.2021
Income
statement
NB Património a)
novobanco Açores
Amoreiras
Other
-
20 445
9 012
Balance sheet
1 578
31.12.2021
Income
statement
6 007
2 053
( 87)
( 288)
7 685
6 007
2 053
( 87)
( 288)
31 035
-
20 445
9 012
1 578
NB Património a)
a) Non-controlling interests relating to Open real estate investment funds are recorded as Other liabilities (see Note 33)
novobanco Açores
Amoreiras
The changes occurred in the caption Non-controlling interests may be analysed as follows:
The changes occurred in the caption Non-controlling interests may be analysed as follows:
Other
43,67%
42,47%
4,76%
a) Non-controlling interests relating to Open real estate investment funds are recorded as Other liabilities (see Note 33)
31 035
7 685
Non-controlling interests at the beginning of the exercise
The changes occurred in the caption Non-controlling interests may be analyzed as follows:
Changes in consolidation perimeter and control percentages
Changes in fair value reserves
Other
Net profit / (loss) for the exercise
Non-controlling interests at the beginning of the exercise
Changes in consolidation perimeter and control percentages
Non-controlling interests at the end of the exercise
Changes in fair value reserves
Other
NOTE 38 – CONTINGENT LIABILITIES AND COMMITMENTS
Net profit / (loss) for the exercise
% Non-
interests
43,67%
42,47%
4,76%
% Non-
controlling
interests
-
18 451
9 099
Balance sheet
4 496
(in thousands of Euros)
31.12.2020
Income
statement
% Non-
controlling
interests
31.12.2020
( 7 759)
1 134
( 123)
( 3 326)
Income
statement
(in thousands of Euros)
44,17%
42,47%
4,76%
% Non-
controlling
interests
32 046
-
18 451
9 099
4 496
( 10 074)
( 7 759)
1 134
( 123)
( 3 326)
32 046
( 10 074)
31.12.2021
31.12.2020
(in thousands of Euros)
44,17%
42,47%
4,76%
36 624
( 1 553)
( 830)
7 879
( 10 074)
36 624
( 1 553)
32 046
( 830)
7 879
( 10 074)
(in thousands of Euros)
31.12.2021
31.12.2020
32 046
( 3 288)
142
( 5 550)
7 685
32 046
( 3 288)
31 035
142
( 5 550)
7 685
NOTE 38 – CONTINGENT LIABILITIES AND
COMMITMENTS
Non-controlling interests at the end of the exercise
In addition to the derivative financial instruments, the balances relating to off-balance accounts as at 31 December 2021 and 2020
are the following:
31 035
32 046
NOTE 38 – CONTINGENT LIABILITIES AND COMMITMENTS
(in thousands of Euros)
31.12.2021
31.12.2020
In addition to the derivative financial instruments, the balances relating to off-balance accounts as at
31 December 2021 and 2020 are the following:
In addition to the derivative financial instruments, the balances relating to off-balance accounts as at 31 December 2021 and 2020
are the following:
Contingent liabilities
Guarantees and standby letters
Financial assets pledged as collateral
Open documentary credits
2 234 243
13 997 048
402 332
2 826 190
(in thousands of Euros)
14 101 034
410 292
31.12.2020
31.12.2021
Contingent liabilities
Guarantees and standby letters
Commitments
Financial assets pledged as collateral
Revocable commitments
Open documentary credits
Irrevocable commitments
16 666 552
2 234 243
13 997 048
5 298 799
402 332
546 458
16 666 552
5 845 257
17 337 516
2 826 190
14 101 034
6 389 435
410 292
631 500
17 337 516
7 020 935
Commitments
Revocable commitments
Irrevocable commitments
Guarantees and standby letters provided are banking operations that do not imply any mobilization of funds for the Group.
5 298 799
546 458
6 389 435
631 500
As at 31 December 2021, the caption financial assets pledged as collateral includes:
The market value of financial assets pledged as collateral to the European Central Bank in the scope of a liquidity facility, in the
5 845 257
7 020 935
amount of Euro 13.2 billion (31 December 2020: Euro 13.1 billion);
Guarantees and standby letters provided are banking operations that do not imply any mobilization of
funds for the Group.
Guarantees and standby letters provided are banking operations that do not imply any mobilization of funds for the Group.
Securities pledged as collateral to the Portuguese Securities and Exchange Commission (“Comissão do Mercado de Valores
Mobiliários” (CMVM)) in the scope of the Investors Indemnity System (“Sistema de Indemnização aos Investidores”), in the amount
of Euro 9.1 million (31 December 2020: Euro 9.4 million);
As at 31 December 2021, the caption financial assets pledged as collateral includes:
The market value of financial assets pledged as collateral to the European Central Bank in the scope of a liquidity facility, in the
Securities pledged as collateral to the Deposits’ Guarantee Fund (“Fundo de Garantia de Depósitos”), in the amount of Euro 67.5
(“Sistema de Indemnização aos Investidores”), in the amount of Euro 9.1 million (31 December 2020:
Euro 9.4 million);
• Securities pledged as collateral to the Deposits’ Guarantee Fund (“Fundo de Garantia de Depósitos”),
As at 31 December 2021, the caption financial assets pledged as collateral includes:
amount of Euro 13.2 billion (31 December 2020: Euro 13.1 billion);
million (31 December 2020: Euro 70.8 million);
Em 31 de dezembro de 2021, a rubrica de ativos financeiros dados em garantia inclui:
Securities pledged as collateral to the Portuguese Securities and Exchange Commission (“Comissão do Mercado de Valores
Securities pledged as collateral to the European Investment Bank, in the amount of Euro 651.4 million (31 December 2020: Euro
Mobiliários” (CMVM)) in the scope of the Investors Indemnity System (“Sistema de Indemnização aos Investidores”), in the amount
769.7 million);
of Euro 9.1 million (31 December 2020: Euro 9.4 million);
Securities delivered as collateral in connection with derivatives trading with a central counterparty in the amount of Euro 100.5
Securities pledged as collateral to the Deposits’ Guarantee Fund (“Fundo de Garantia de Depósitos”), in the amount of Euro 67.5
million (31 December 2020: Euro 769.7 million);
in the amount of Euro 67.5 million (31 December 2020: Euro 70.8 million);
• Securities pledged as collateral to the European Investment Bank, in the amount of Euro 651.4
• The market value of financial assets pledged as collateral to the European Central Bank in the scope
of a liquidity facility, in the amount of Euro 13.2 billion (31 December 2020: Euro 13.1 billion);
million (31 December 2020: Euro 107.0 million).
million (31 December 2020: Euro 70.8 million);
• Securities delivered as collateral in connection with derivatives trading with a central counterparty
• Securities pledged as collateral to the Portuguese Securities and Exchange Commission (“Comissão
do Mercado de Valores Mobiliários” (CMVM)) in the scope of the Investors Indemnity System
Securities pledged as collateral to the European Investment Bank, in the amount of Euro 651.4 million (31 December 2020: Euro
The above mentioned financial assets pledged as collateral are recorded in the various asset categories of the Group’s balance sheet
and may be executed in the event the Group does not fulfil its obligations under the terms and conditions of the contracts celebrated .
Securities delivered as collateral in connection with derivatives trading with a central counterparty in the amount of Euro 100.5
The increase in the value of securities pledged as collateral to the European Investment Bank is related to the reinforcement of the
collateral due to changes in the minimum required amounts.
million (31 December 2020: Euro 107.0 million).
769.7 million);
in the amount of Euro 100.5 million (31 December 2020: Euro 107.0 million).
The above mentioned financial assets pledged as collateral are recorded in the various asset categories of the Group’s balance sheet
and may be executed in the event the Group does not fulfil its obligations under the terms and conditions of the contracts celebrated.
The increase in the value of securities pledged as collateral to the European Investment Bank is related to the reinforcement of the
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
collateral due to changes in the minimum required amounts.
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256
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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The above mentioned financial assets pledged as collateral are recorded in the various asset categories
of the Group’s balance sheet and may be executed in the event the Group does not fulfil its obligations
under the terms and conditions of the contracts celebrated. The increase in the value of securities
pledged as collateral to the European Investment Bank is related to the reinforcement of the collateral
due to changes in the minimum required amounts.
Documentary credits are irrevocable commitments made by the Group, on behalf of its customers, to pay or order to pay a certain
amount to a supplier of goods or services, within a determined period, upon the presentation of documentation of the expedition of
the goods or rendering of the services. The condition of “irrevocable” derives from the fact that they may not be cancelled neither
changed without the agreement of all involved parties.
of time or with other expiration conditions and, usually, require the payment of a fee. Almost all credit
commitments in force require that customers continue meeting certain conditions that were verified at
the time the credit was contracted.
Revocable and irrevocable commitments represent contractual agreements to extend credit to customers of the Group (e.g. undrawn
credit lines), which are, generally, contracted for fixed periods of time or with other expiration conditions and, usually, require the
payment of a fee. Almost all credit commitments in force require that customers continue meeting certain conditions that were verified
at the time the credit was contracted.
Despite the characteristics of these contingent liabilities and commitments, these operations require
a previous rigorous risk assessment of the solvency of the customer and of its business, similarly to
any other commercial operation. When necessary, the Group requires the collateralisation of these
transactions. Since it is expected that the majority of these operations will mature without any funds
having been drawn, these amounts do not necessarily represent future cash out-flows.
Documentary credits are irrevocable commitments made by the Group, on behalf of its customers, to
pay or order to pay a certain amount to a supplier of goods or services, within a determined period,
upon the presentation of documentation of the expedition of the goods or rendering of the services.
The condition of “irrevocable” derives from the fact that they may not be cancelled neither changed
without the agreement of all involved parties.
Despite the characteristics of these contingent liabilities and commitments, these operations require a previous rigorous risk
assessment of the solvency of the customer and of its business, similarly to any other commercial operation. When necessary, the
Group requires the collateralisation of these transactions. Since it is expected that the majority of these operations will mature without
any funds having been drawn, these amounts do not necessarily represent future cash out-flows.
Additionally, liabilities recorded in off-balance sheet items related to banking services provided are as
follows:
Revocable and irrevocable commitments represent contractual agreements to extend credit to
customers of the Group (e.g. undrawn credit lines), which are, generally, contracted for fixed periods
Adicionalmente, as responsabilidades evidenciadas em contas extrapatrimoniais relacionadas com a
prestação de serviços bancários são como segue:
Additionally, liabilities recorded in off-balance sheet items related to banking services provided are as follows:
Deposit and custody of securities and other items
Amounts received for subsequent collection
Securitized loans under management (servicing)
Other responsibilities related with banking services
(in thousands of Euros)
31.12.2021
31.12.2020
31 739 971
197 567
620 091
652 518
35 469 555
233 699
697 905
1 519 011
33 210 147
37 920 170
a. All credits related to preferred shares issued by vehicle companies established by BES and sold
Pursuant to the resolution measure applied to BES by resolution of Bank of Portugal of 3 August 2014
(point 1., point b), subparagraph (vii) of Annex 2), as amended by the decision of Bank of Portugal of 11
August 2014, the “excluded liabilities” of transfer to novobanco include “any obligations, guarantees,
liabilities or contingencies assumed in the commercialization, financial intermediation and distribution
of debt instruments issued by entities that are part of the Espírito Santo Group (…) ”.
Pursuant to the resolution measure applied to BES by resolution of Bank of Portugal of 3 August 2014 (point 1., point b), subparagraph
(vii) of Annex 2), as amended by the decision of Bank of Portugal of 11 August 2014, the “excluded liabilities” of transfer to novobanco
include “any obligations, guarantees, liabilities or contingencies assumed in the commercialization, financial intermediation and
distribution of debt instruments issued by entities that are part of the Espírito Santo Group (…) ”.
Pursuant to point and subparagraph above and subpoint (v), liabilities excluded also include “any liabilities or contingencies, namely
those arising from fraud or violation of regulatory, criminal or administrative offenses or provisions”.
novobanco;
by BES;
Pursuant to point and subparagraph above and subpoint (v), liabilities excluded also include “any
liabilities or contingencies, namely those arising from fraud or violation of regulatory, criminal or
administrative offenses or provisions”.
On December 29, 2015, Bank of Portugal adopted a new resolution on “Clarification and retransmission of responsibilities and
contingencies defined as liabilities excluded in subparagraphs (v) to (vii) of paragraph 2 (b) of Annex 2 to the Resolution of Bank of
Portugal of 3 August 2014 (8 pm), as amended by the Resolution of Bank of Portugal of 11 August 2014 (5 pm) ”. Under the terms of
this resolution, Bank of Portugal came:
Seguros de Vida, S.A;
On December 29, 2015, Bank of Portugal adopted a new resolution on “Clarification and retransmission
of responsibilities and contingencies defined as liabilities excluded in subparagraphs (v) to (vii) of
paragraph 2 (b) of Annex 2 to the Resolution of Bank of Portugal of 3 August 2014 (8 pm), as amended
by the Resolution of Bank of Portugal of 11 August 2014 (5 pm) ”. Under the terms of this resolution,
Bank of Portugal came:
(i) Clarify the treatment as liabilities excluded from BES's contingent and unknown liabilities (including litigious liabilities related to
pending litigation and liabilities or contingencies resulting from fraud or the violation of regulatory, criminal or administrative
offenses or provisions), regardless of their nature ( tax, Labour, civil or other) and whether or not they are registered in BES's
accounts, under the terms of sub-paragraph (v) of paragraph (b) of paragraph 1 of Exhibit 2 of the Resolution of 3 August; and
provider of financial and investment services;
in which BES was the lender;
c. All indemnities related to non-compliance with contracts (purchase and sale of real estate and
other assets) signed and executed before 8:00 pm on August 3, 2014;
d. All indemnities related to life insurance contracts, in which the insurer was BES - Companhia de
e. All credits and indemnities related to the alleged cancellation of certain loan agreement clauses
b. All credits, indemnities and expenses related to real estate assets that have been transferred to
f. All indemnities and credits resulting from the cancellation of operations carried out by BES as a
(ii) Clarify that the following BES liabilities have not been transferred from BES to novobanco:
g. Any responsibility that is the subject of any of the processes described in Appendix I of said
i. Clarify the treatment as liabilities excluded from BES’s contingent and unknown liabilities (including
litigious liabilities related to pending litigation and liabilities or contingencies resulting from fraud
or the violation of regulatory, criminal or administrative offenses or provisions), regardless of their
nature ( tax, Labour, civil or other) and whether or not they are registered in BES’s accounts, under
the terms of sub-paragraph (v) of paragraph (b) of paragraph 1 of Exhibit 2 of the Resolution of 3
August; and
executed before 8:00 pm on August 3, 2014;
lender;
a. All credits related to preferred shares issued by vehicle companies established by BES and sold by BES;
b. All credits, indemnities and expenses related to real estate assets that have been transferred to novobanco;
c. All indemnities related to non-compliance with contracts (purchase and sale of real estate and other assets) signed and
resolution.
d. All indemnities related to life insurance contracts, in which the insurer was BES - Companhia de Seguros de Vida, S.A;
e. All credits and indemnities related to the alleged cancellation of certain loan agreement clauses in which BES was the
iii. To the extent that, despite the clarifications made above, it turns out that any liabilities of BES
that, under the terms of any of those paragraphs and the Resolution of August 3, were effectively
transferred to novobanco legal liabilities, these liabilities will be retransmitted from novobanco to
BES, with effect from 8:00 pm on August 3, 2014.
ii. Clarify that the following BES liabilities have not been transferred from BES to novobanco:
and investment services;
f. All indemnities and credits resulting from the cancellation of operations carried out by BES as a provider of financial
g. Any responsibility that is the subject of any of the processes described in Appendix I of said resolution.
In the preparation of its consolidated financial statements for 31 December 2021 (as well as in the
previous financial statements), novobanco incorporated the determinations resulting from the
(iii) To the extent that, despite the clarifications made above, it turns out that any liabilities of BES that, under the terms of any of
those paragraphs and the Resolution of August 3, were effectively transferred to novobanco legal liabilities, these liabilities will
be retransmitted from novobanco to BES, with effect from 8:00 pm on August 3, 2014.
In the preparation of its consolidated financial statements for 31 December 2021 (as well as in the previous financial statements),
novobanco incorporated the determinations resulting from the resolution measure, as amended, with regard to the perimeter of
transfer of assets, liabilities, off-balance sheet items and assets under BES management, as well as the decisions of Bank of Portugal
of 29 December 2015, in particular, regarding the clarification of the non-transmission to novobanco of contingent and unknown
liabilities and clarifications relating to the liabilities contained in paragraph (ii) above, including the lawsuits listed in that resolution.
257
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
resolution measure, as amended, with regard to the perimeter of transfer of assets, liabilities, off-
balance sheet items and assets under BES management, as well as the decisions of Bank of Portugal
of 29 December 2015, in particular, regarding the clarification of the non-transmission to novobanco of
contingent and unknown liabilities and clarifications relating to the liabilities contained in paragraph (ii)
above, including the lawsuits listed in that resolution.
Additionally, also by resolution of Bank of Portugal of 29 December 2015, it was decided that the
Resolution Fund is responsible for neutralizing, at the level of novobanco, the effects of decisions that
are legally binding, outside the will of novobanco and for the which it has not contributed and that,
simultaneously, translate into the materialization of responsibilities and contingencies that, according
to the transfer perimeter to novobanco, as defined by Bank of Portugal, should remain within the sphere
of BES or give rise to the establishment compensation in the context of the execution of annulments of
decisions adopted by Bank of Portugal.
Considering that the creation of the Bank results from the application of a resolution measure to BES,
which had significant impacts on the equity of third parties, and without prejudice to the decisions
of Bank of Portugal of December 29, 2015, there are still relevant litigation risks , although mitigated,
namely, regarding the various litigations related to the loan made by Oak Finance to BES, the
commercialization by BES of debt instruments and those related to the issue of senior bonds relayed
to BES, as well as the risk of non-recognition and / or application of the various decisions of Bank of
Portugal by Portuguese or foreign courts (as in the case of courts in Spain) in disputes related to the
perimeter of assets, liabilities, off-balance sheet items and assets under BES management transferred
to novobanco. These disputes include the two lawsuits brought at the end of January 2016, before the
Supreme Court of Justice of Venezuela, by the Banco de Desarrollo Económico y Social de Venezuela and
the Fondo de Desarrollo Nacional against BES and novobanco, relating to the sale of debt instruments
issued by entities belonging to the Espírito Santo Group, in the amount of US $ 37 million and US $ 335
million, respectively, and in which reimbursement of the amount invested is requested, plus interest,
indemnity for the inflation value and costs (in the global value estimated by the respective authors
of US $ 96 milion and US $ 871 million, respectively). These main actions are still pending before the
Supreme Court of Justice of Venezuela.
In the preparation of novobanco ‘s individual and consolidated financial statements of 31 December
2021 (as well as in the previous financial statements), the Executive Board of Directors reflected the
Resolution Measure and related decisions taken by Bank of Portugal, in particular the decisions of
December 29, 2015. In this context, these financial statements, namely with regard to provisions for
contingencies arising from lawsuits, reflect the exact perimeter of assets, liabilities, off-balance sheet
items and assets under BES management and liabilities transferred to novobanco, as determined by
Bank of Portugal and with reference to the current legal bases and the information available at the
present date.
Additionally, within the scope of the novobanco sale operation, concluded on October 18, 2017, the
respective contractual documents contain specific provisions that produce effects equivalent to
the resolution of the Board of Directors of Bank of Portugal, of December 29, 2015, regarding the
neutralization, at the level of novobanco, of the effects of unfavorable decisions that are legally binding,
although, now, with contractual origin, thus maintaining the framework of contingent responsibilities
of the Resolution Fund.
Relevant disputes
For the purposes of contingent liabilities, and without prejudice to the information contained in these
notes to the accounts, namely with regard to the conformity of the policy of setting up provisions with
the resolution measure and subsequent decisions of Bank of Portugal (and criteria for the allocation
of responsibilities and contingencies arising therefrom), it is also necessary to identify the following
disputes whose effects or impacts on the financial statements of novobanco GROUP are, at the present
date, insusceptible to determine or quantify:
i. Legal action brought by Partran, SGPS, S.A., Massa Insolvente by Espírito Santo Financial Group, S.A.
and Massa Insolvente by Espírito Santo Financial (Portugal), S.A. against novobanco and Calm Eagle
Holdings, S.A.R.L. through which it is intended the declaration of nullity of the pledge constituted
on the shares of Companhia de Seguros Tranquilidade, S.A. and, alternatively, the annulment of the
pledge or the declaration of its ineffectiveness;
ii. Lawsuit filed by novobanco to challenge the resolution in favor of the insolvent estate of the acts
of incorporation and subsequent execution of the pledge on the shares of Companhia de Seguros
Tranquilidade, SA, declared by the insolvency administrator of Partran, SGPS, SA, considering
that there are no grounds for the resolution of the aforementioned acts, as well as for the return
of the amounts received as a price (Euro 25 million corresponding to the initial price and the
respective positive adjustments) for the sale of the shares of Companhia de Seguros Tranquilidade
, SA. novobanco has judicially challenged the resolution act, running the process attached to the
insolvency process of Partran, SGPS, SA;
iii. Lawsuits brought after the execution of the contract for the purchase and sale of novobanco ‘s
share capital, signed between the Resolution Fund and Lone Star on March 31, 2017, related to
the conditions of the sale, namely the lawsuit administrative action brought by Banco Comercial
Português, SA against the Resolution Fund, of which novobanco is not a party and, under which,
according to the public disclosure of privileged information made by BCP on the CMVM website on
September 1, 2017, the legal assessment of the contingent capitalization obligation assumed by the
Resolution Fund within the scope of the Contingent Capitalization Mechanism is requested;
Resolution Fund
The Resolution Fund is a public legal person with administrative and financial autonomy, created by
Decree-Law no. 31-A / 2012, of 10 February, which is governed by the RGICSF and its regulations and
whose mission is provide financial support to the resolution measures applied by Bank of Portugal, as
the national resolution authority, and to perform all other functions conferred by law in the scope of the
execution of such measures.
The Bank, like most financial institutions operating in Portugal, is one of the institutions participating in
the Resolution Fund, making contributions that result from the application of a rate defined annually by
Bank of Portugal based essentially on the amount of its liabilities. As at 31 December 2021, the Group’s
periodic contribution amounted to Euro 15,150 thousand (31 December 2020: Euro 12,743 thousand).
Within the scope of its responsibility as a supervisory and resolution authority, Bank of Portugal, on
August 3, 2014, decided to apply a resolution measure to BES, pursuant to paragraph 5 of article 145-G
258
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes of the General Regime of Institutions Credit and Financial Companies (RGICSF), which consisted of
transferring most of its activity to novobanco, created especially for this purpose, with the capitalization
being ensured by the Resolution Fund.
For the realization of novobanco’s share capital, the Resolution Fund made available Euro 4,900 million,
of which Euro 365 million corresponded to its own financial resources. A loan from a banking syndicate
was also granted to the Resolution Fund, in the amount of Euro 635 million, with the participation of
each credit institution being weighted according to several factors, including the respective size. The
remaining amount (Euro 3,900 million) originated from a loan granted by the Portuguese State.
In December 2015, the national authorities decided to sell most of the assets and liabilities associated
with the activity of Banif - Banco Internacional do Funchal, SA (BANIF) to Banco Santander Totta, SA
(Santander Totta), for Euro 150 million, also within the framework of the application of a resolution
measure. In the context of this resolution measure, Banif’s assets identified as problematic were
transferred to an asset management vehicle, created for this purpose - Oitante, S.A. This operation
involved public support estimated at Euro 2,255 million, which aimed at covering future contingencies,
financed at Euro 489 million by the Resolution Fund and Euro 1,766 million directly by the Portuguese
State.
The situation of serious financial imbalance in which BES was in 2014 and BANIF in 2015, which justified
the application of resolution measures, created uncertainties related to the risk of litigation involving
the Resolution Fund, which is significant, as well as with the risk of an eventual insufficiency of resources
to ensure the fulfilment of the liabilities, in particular the short-term repayment of the borrowings.
It was in this context that, in the second half of 2016, the Portuguese Government reached an agreement
with the European Commission to change the financing conditions granted by the Portuguese State
and by the banks participating in the Resolution Fund, in order to preserve financial stability. through
the promotion of conditions that provide predictability and stability to the contributory effort for
the Resolution Fund. To this end, an amendment to the financing contracts to the Resolution Fund
was formalized, which introduced a set of changes on the repayment plans, the remuneration rates
and other terms and conditions associated with these loans in order to adjust them. the Resolution
Fund’s ability to fully meet its obligations based on its regular revenues, that is, without the need to be
charged, to the banks participating in the Resolution Fund, special contributions or any other type of
extraordinary contribution.
According to the statement of the Resolution Fund of March 21, 2017, issued following an earlier
statement of September 28, 2016 and the statement of the Ministry of Finance issued on the same
date, the revision of the conditions of financing granted by the State Portuguese and participating
banks aimed to ensure the sustainability and financial balance of the Resolution Fund, based on a
stable, predictable and affordable charge for the banking sector. Based on this review, the Resolution
Fund assumed that the full payment of its liabilities is ensured, as well as the respective remuneration,
without the need for recourse to special contributions or any other type of extraordinary contributions
by the banking sector.
On March 31, 2017, Bank of Portugal announced that it had selected the Lone Star Fund for the
purchase of novobanco, which was completed on October 18, 2017, through the injection, by the new
shareholder, of Euro 750 million, which was followed by a new a capital contribution of Euro 250 million,
made on December 21, 2017. The Lone Star Fund now holds 75% of novobanco ‘s share capital and the
Resolution Fund the remaining 25%. Additionally, the approved conditions include:
• A contingent capitalization mechanism, under which the Resolution Fund may be called upon to make
payments in the event of certain cumulative conditions materializing, related to: (i) the performance
of a restricted set of assets of novobanco and (ii) the evolution of the Bank’s capitalization levels.
Any payments to be made under this contingent mechanism are subject to an absolute ceiling of
EUR 3,890 million;
• An indemnity mechanism to novobanco, if certain conditions are met, it will be sentenced to pay any
liability, by a final judicial decision that does not recognize or is contrary to the resolution measure
applied by Bank of Portugal, or to the perimeter novobanco’s assets and liabilities.
Notwithstanding the possibility provided for in the applicable legislation for the collection of special
contributions, in view of the renegotiation of the conditions for loans granted to the Resolution Fund
by the Portuguese State and a banking union, and to public notices issued by the Resolution Fund and
the Office of the Minister of Finance. Finances that state that this possibility will not be used, these
financial statements reflect the expectation of the Executive Board of Directors that the Bank will not
be required to make special contributions or any other type of extraordinary contributions to finance
the resolution measures applied to BES and BANIF, as well as the contingent capitalization mechanism
and the indemnity mechanism referred to in the preceding paragraphs.
Any changes regarding this matter and the application of these mechanisms may have relevant
implications for the Group’s financial statements.
NOTE 39 – DISINTERMEDIATION
In accordance with the legislation in force, the managing companies together with the depositary Bank
are jointly liable to the participants of the funds for the non-fulfilment of obligations assumed under
the terms of the law and the regulations of the funds managed.
As at 31 December 2021 and 2020, the value of the assets under management by the Group companies
are analysed as follows:
259
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes As at 31 December 2021 and 2020, the value of the assets under management by the Group companies are analysed as follows:
Investment funds
Real estate investment funds
Pension funds
Discretionary management
(in thousands of Euros)
31.12.2021
31.12.2020
1 309 544
67 408
2 633 464
700 260
1 128 238
74 654
2 463 098
710 054
4 710 676
4 376 044
The amounts included in these captions are measured at fair value, determined at the balance sheet date.
The amounts included in these captions are measured at fair value, determined at the balance sheet
date.
NOTE 40 – RELATED PARTIES BALANCES AND TRANSACTIONS
NOTE 40 – RELATED PARTIES BALANCES AND
TRANSACTIONS
The group of entities considered to be related parties by novobanco in accordance with the IAS 24 definitions, are (i) key
management personnel (members of the Executive Board of Directors and members of the General Supervisory Board of
novobanco); (ii) people or entities with a family, legal or business relationship with key management personnel; (iii) people or entities
with a family, legal or business relationship with shareholders; (iv) shareholders holding direct or indirect stakes equal to or exceeding
2% of the share capital or voting rights of novobanco; (v) subsidiaries consolidated for accounting purposes under the full
consolidation method; (vi) associated companies, that is, companies over which novobanco Group has significantly influence on the
company’s financial and operational polices, despite not having control; and (vii) entities under joint control of novobanco (joint
ventures).
The group of entities considered to be related parties by novobanco in accordance with the IAS 24
definitions, are (i) key management personnel (members of the Executive Board of Directors and
members of the General Supervisory Board of novobanco); (ii) people or entities with a family, legal
1) Credit Operations
During 2021, the following transactions with Related Parties (credit and other types) were carried out:
1) Credit Operations
or business relationship with key management personnel; (iii) people or entities with a family, legal
or business relationship with shareholders; (iv) shareholders holding direct or indirect stakes equal to
or exceeding 2% of the share capital or voting rights of novobanco; (v) subsidiaries consolidated for
accounting purposes under the full consolidation method; (vi) associated companies, that is, companies
over which novobanco Group has significantly influence on the company’s financial and operational
polices, despite not having control; and (vii) entities under joint control of novobanco (joint ventures).
During 2021, the following transactions with Related Parties (credit and other types) were carried out:
Entities / Individuals
Category
Operation
Amount (euros)
BEST
Entities / Individuals
Banco Electrónico de Serviço Total S.A.
BEST
Banco Electrónico de Serviço Total S.A.
EDENRED - Portugal S.A.
EDENRED - Portugal S.A.
LOCARENT - Companhia Portuguesa Aluguer Viaturas S.A.
LOCARENT - Companhia Portuguesa Aluguer Viaturas S.A.
LOCARENT - Companhia Portuguesa Aluguer Viaturas S.A.
novobanco Group
Category
novobanco Group
novobanco Group
novobanco Group
novobanco Group
novobanco Group
novobanco Group
novobanco Group
novobanco Group
novobanco Group
novobanco Group
novobanco Group
Novobanco dos Açores
Common Management and/or
Supervisory Members
novobanco Group
Bank Guarantee
Operation
Bank Guarantee
8 090 174
41 359 876
Amount (euros)
Direct Debits Limits (RCE) (renewal)
Bank Guarantee
410 000
8 090 174
Credit Card Limits (renewal)
Bank Guarantee
Credit Card Limits (renewal)
Direct Debits Limits (RCE) (renewal)
Current-Account Loan Account (renewal)
Credit Card Limits (renewal)
Trading Room Opera�ons (RCE)
Direct Debits Limits (RCE) (renewal)
Credit Card Limits (renewal)
Leasing (renewal and reduc�on)
Current-Account Loan Account (renewal)
Leasing (renewal)
Commercial paper (renewal)
Trading Room Operations (RCE)
Commercial paper (renewal)
Direct Debits Limits (RCE) (renewal)
Commercial paper (renewal)
Leasing (renewal and reduction)
Commercial paper (renewal)
Leasing (renewal)
Full subscrip�on of the issue of Senior Debt
Securi�es (non-preferred) at the novobanco dos
Açores by the novobanco
Commercial paper (renewal)
24 000
10 000
2 500 000
3 000 000
4 000 000
25 000 000
43 250 000
1 000 000
4 500 000
23 000 000
50 000 000
41 359 876
410 000
24 000
10 000
2 500 000
3 000 000
4 000 000
25 000 000
43 250 000
5 000 000
1 000 000
LOCARENT - Companhia Portuguesa Aluguer Viaturas S.A.
Novo Banco Group
(BEST, NB Açores e NB Finance)
Common Management and/or
Supervisory Members
novobanco Group
• Interbank Limits (Trading Room Opera�ons)
• Commercial Limits
Commercial paper (renewal)
1 400 000 000
23 000 000
Commercial paper (renewal)
50 000 000
Commercial paper (renewal)
4 500 000
Novobanco dos Açores
Unicre - Cartão Internacional de Crédito S.A.
Common Management and/or
novobanco Group
Supervisory Members
Current-Account Loan Account
Full subscription of the issue of Senior Debt
Current-Account Loan Account
Securities (non-preferred) at the novobanco dos
Açores by the novobanco
Reformula�on of 3 Current Account Loans (renewal)
18 000 000
20 050 000
Up to 10 000 000
5 000 000
Novo Banco Group
(BEST, NB Açores e NB Finance)
Common Management and/or
Supervisory Members
• Interbank Limits (Trading Room Operations)
• Commercial Limits
1 400 000 000
260
Unicre - Cartão Internacional de Crédito S.A.
novobanco Group
Current-Account Loan Account
18 000 000
Current-Account Loan Account
Up to 10 000 000
Reformulation of 3 Current Account Loans
(renewal)
20 050 000
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 95 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
2) Services rendered and other signed contracts
2) Services rendered and other signed contracts
2) Services rendered and other signed contracts
Entities / Individuals
Entities / Individuals
GNB Gestão de Ativos
Category
Category
novobanco Group
Operation
Intra Group Services Agreement
Operation
GNB Soc Gestora de Fundo de Pensões S.A.
GNB Gestão de Ativos
novobanco Group
novobanco Group
Intra Group Services Agreement
Real Estate Transaction
GNB Soc Gestora de Fundo de Pensões S.A.
novobanco Group
Real Estate Transaction
Amount (euros)
Amount (euros)
na
na
22 932 300
22 932 300
The Group balances with related parties as at 31 December 2021 and 2020, as well as the respective
profit and losses, can be summarised as follows:
The Group balances with related parties as at 31 December 2021 and 2020, as well as the respective profit and losses, can be
summarised as follows:
The Group balances with related parties as at 31 December 2021 and 2020, as well as the respective profit and losses, can be
summarised as follows:
(in thousands of Euros)
Shareholders
NANI HOLDINGS
Shareholders
FUNDO DE RESOLUÇÃO
Associated companies
NANI HOLDINGS
FUNDO DE RESOLUÇÃO
LINEAS
Associated companies
LOCARENT
LINEAS
ESEGUR
LOCARENT
UNICRE
ESEGUR
MULTIPESSOAL
UNICRE
BANCO DELLE TRE VENEZIE
MULTIPESSOAL
EDENRED
BANCO DELLE TRE VENEZIE
ENKROTT
EDENRED
PNBC
ENKROTT
PNBC
Other
HUDSON ADVISORS PORTUGAL
Other
NACIONAL CONTA LDA
HUDSON ADVISORS PORTUGAL
INFRAMOURA
NACIONAL CONTA LDA
ESMALGLASS
INFRAMOURA
MARINA VILAMOURA
ESMALGLASS
MARINA VILAMOURA
Other
31.12.2021
Liabilities Guarantees
31.12.2021
Income
Expenses
Assets
31.12.2020
Liabilities Guarantees
31.12.2020
Income
(in thousands of Euros)
Expenses
Liabilities Guarantees
Liabilities Guarantees
-
-
-
-
-
-
-
915
-
-
915
273
-
-
273
62
-
-
62
-
-
1 250
-
1 250
-
-
-
-
-
2
-
-
2
-
2
Income
332
-
332
-
2 395
1 040
2 395
-
1 040
522
-
-
522
-
-
2 039
-
-
2 039
-
-
6 328
-
6 328
-
-
-
-
-
-
-
-
-
-
-
Expenses
-
26 190
-
26 190
-
3 282
-
-
3 282
-
-
-
-
-
-
24
-
-
24
-
-
29 496
-
29 496
4 138
-
4 138
-
-
-
-
-
-
-
4 138
Assets
-
598 312
-
598 312
64 933
115 832
64 933
2 955
115 832
22 597
2 955
2 030
22 597
-
2 030
2
-
-
2
-
-
806 661
-
806 661
-
295
-
114
295
-
114
-
-
-
409
153
-
153
-
6 505
633
6 505
1 650
633
49
1 650
31
49
94
31
81 821
94
-
81 821
-
-
90 936
-
90 936
-
52
-
16
52
107
16
1
107
1
176
-
-
-
-
-
-
-
915
-
-
915
273
-
-
273
62
-
-
62
-
-
1 250
-
1 250
-
-
-
-
-
2
-
-
2
-
2
Income
332
-
332
-
2 871
1 081
2 871
-
1 081
289
-
31
289
31
1 967
15
1 967
-
15
6 586
-
6 586
-
-
-
-
-
-
-
-
-
-
-
Expenses
-
12 743
-
12 743
-
3 806
-
-
3 806
-
-
-
-
-
37
37
276
16 862
276
16 862
4 685
-
4 685
-
-
-
-
-
-
-
4 685
Assets
Assets
-
212 515
-
209 220
-
121 982
-
1 894
121 982
38 193
1 894
2 017
38 193
-
2 017
1
-
-
1
-
-
376 602
-
373 307
-
375
-
-
375
-
-
-
-
375
-
375
153
11 040
153
11 040
3 123
3 146
3 123
919
3 146
6
919
43
6
222
43
93 081
222
-
93 081
-
-
111 733
-
111 733
-
18
-
-
18
100
-
-
100
118
-
118
The amount of assets receivable from the Resolution Fund corresponds to the amount of the triggering
of the Contingent Capital Agreement regarding the financial years 2021 and 2020. The liability
corresponds to the amount to be delivered to the Resolution Fund arising from an addendum made in
May 2021 to the Contingent Capitalization Mechanism contract.
-
2
409
Other
4 138
4 685
The amount of assets receivable from the Resolution Fund corresponds to the amount of the triggering of the Contingent Capital
Agreement regarding the financial years 2021 and 2020. The liability corresponds to the amount to be delivered to the Resolution
The amount of assets receivable from the Resolution Fund corresponds to the amount of the triggering of the Contingent Capital
Fund arising from an addendum made in May 2021 to the Contingent Capitalization Mechanism contract.
Agreement regarding the financial years 2021 and 2020. The liability corresponds to the amount to be delivered to the Resolution
Fund arising from an addendum made in May 2021 to the Contingent Capitalization Mechanism contract.
In June 2018 a contract was entered into between NANI HOLDINGS, SGPS, S.A., LSF NANI INVESTMENTS S.à.r.l. and
novobanco, to provide support services for the preparation of consolidated information and regulatory reports.
In June 2018 a contract was entered into between NANI HOLDINGS, SGPS, S.A., LSF NANI INVESTMENTS S.à.r.l. and
novobanco, to provide support services for the preparation of consolidated information and regulatory reports.
The assets on the balance sheet related to associated companies included in the table above refer mainly to loans and advances,
and shareholder loans granted, or debt securities acquired in the scope of the Group’s activity. The liabilities relate mainly to bank
The assets on the balance sheet related to associated companies included in the table above refer mainly to loans and advances,
deposits taken.
and shareholder loans granted, or debt securities acquired in the scope of the Group’s activity. The liabilities relate mainly to bank
deposits taken.
The guarantees related to associated companies included in the table above refer essentially to guarantees provided.
176
2
-
In June 2018 a contract was entered into between NANI HOLDINGS, SGPS, S.A., LSF NANI INVESTMENTS
S.à.r.l. and novobanco, to provide support services for the preparation of consolidated information and
regulatory reports.
The assets on the balance sheet related to associated companies included in the table above refer
mainly to loans and advances, and shareholder loans granted, or debt securities acquired in the scope
of the Group’s activity. The liabilities relate mainly to bank deposits taken.
The guarantees related to associated companies included in the table above refer essentially to guarantees provided.
Related party transactions were carried out at arm's length, under similar terms and conditions, when compared with others carried
out with unrelated parties, and when these conditions were not verified, those exceptions were substantiated in accordance with the
Related party transactions were carried out at arm's length, under similar terms and conditions, when compared with others ca rried
Bank’s Related Party Transactions Policy.
out with unrelated parties, and when these conditions were not verified, those exceptions were substantiated in accordance wi th the
Bank’s Related Party Transactions Policy.
All the loans granted to related parties are included in the impairment model, being subject to the determination of impairment in the
same manner as the commercial loans and advances granted by the Group in the scope of its activity. All assets placed with related
All the loans granted to related parties are included in the impairment model, being subject to the determination of impairme nt in the
parties earn interest between 0% and 6.24% (the rates correspond to the rates applied according to the original currency of the asset).
same manner as the commercial loans and advances granted by the Group in the scope of its activity. All assets placed with related
parties earn interest between 0% and 6.24% (the rates correspond to the rates applied according to the original currency of the asset).
The guarantees related to associated companies included in the table above refer essentially to
guarantees provided.
Related party transactions were carried out at arm’s length, under similar terms and conditions, when
compared with others carried out with unrelated parties, and when these conditions were not verified,
those exceptions were substantiated in accordance with the Bank’s Related Party Transactions Policy.
All the loans granted to related parties are included in the impairment model, being subject to the
determination of impairment in the same manner as the commercial loans and advances granted by
the Group in the scope of its activity. All assets placed with related parties earn interest between 0%
and 6.24% (the rates correspond to the rates applied according to the original currency of the asset).
The costs with remunerations and other benefits granted to Key Management Personnel of novobanco
in 2021 and 2020, are as follows:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 96 -
- 97 -
261
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The costs with remunerations and other benefits granted to Key Management Personnel of novobanco in 2021 and 2020, are as
follows:
(in thousands of Euros)
The costs with remunerations and other benefits granted to Key Management Personnel of novobanco in 2021 and 2020, are as
follows:
Short-term employment benefits
Post-employment benefits
Short-term employment benefits
Other long-term benefits
Post-employment benefits
Other long-term benefits
Executive
Board of
Directors
Executive
Board of
Directors
2 524
2
2 524
51
2
2 577
51
31.12.2021
General and
Supervisory
31.12.2021
Board
General and
Supervisory
Board
1 183
-
1 183
50
-
1 233
50
Total
Total
3 707
2
3 707
101
2
3 810
101
Executive
Board of
Directors
Executive
Board of
Directors
2 676
3
2 676
33
3
2 712
33
31.12.2020
General and
Supervisory
31.12.2020
Board
General and
Supervisory
Board
993
-
993
8
-
1 001
8
(in thousands of Euros)
Total
Total
3 669
3
3 669
41
3
3 713
41
In 2021 and 2020, variable remuneration to the Executive Board of Directors amounted to Euro 1,600
thousand and Euro 1,860 thousand, respectively, which respects to the remuneration that does not
constitute acquired rights of the respective members until after the end of the restructuring period, and
its payment is subject to approval and verification of certain conditions. Additionally, in 2020, costs of
Euro 320 thousand were recorded as sign-on bonus resulting from the admission of a new Executive
Director, and compensations for the termination of the mandate of three Executive Directors were
recorded in the amount of Euro 206 thousand.
1 001
3 810
2 712
2 577
1 233
3 713
In 2021 and 2020, variable remuneration to the Executive Board of Directors amounted to Euro 1,600 thousand and Euro 1,860
thousand, respectively, which respects to the remuneration that does not constitute acquired rights of the respective members until
after the end of the restructuring period, and its payment is subject to approval and verification of certain conditions. Additionally, in
In 2021 and 2020, variable remuneration to the Executive Board of Directors amounted to Euro 1,600 thousand and Euro 1,860
2020, costs of Euro 320 thousand were recorded as sign-on bonus resulting from the admission of a new Executive Director, and
thousand, respectively, which respects to the remuneration that does not constitute acquired rights of the respective members until
compensations for the termination of the mandate of three Executive Directors were recorded in the amount of Euro 206 thousand.
after the end of the restructuring period, and its payment is subject to approval and verification of certain conditions. Additionally, in
2020, costs of Euro 320 thousand were recorded as sign-on bonus resulting from the admission of a new Executive Director, and
As at 31 December 2021 and 2020, the amount of credit granted and deposits from Key Management Personnel of novobanco was
compensations for the termination of the mandate of three Executive Directors were recorded in the amount of Euro 206 thousand.
as follows:
As at 31 December 2021 and 2020, the amount of credit granted and deposits from Key Management Personnel of novobanco was
Credit Granted
as follows:
(i) to members of the Executive Board of Directors and their immediate relatives was Euro 317 thousand (December 31, 2020: Euro
331 thousand); and (ii) members of the General and Supervisory Board and their immediate relatives did not had credit granted
Credit Granted
(December 31, 2020: no exposure);
(i) to members of the Executive Board of Directors and their immediate relatives was Euro 317 thousand (December 31, 2020: Euro
331 thousand); and (ii) members of the General and Supervisory Board and their immediate relatives did not had credit granted
Deposits
(December 31, 2020: no exposure);
(i) members of the Executive Board of Directors and their immediate relatives was Euro 1,080 thousand; (December 31, 2020: Euro
1,312 thousand) and (ii) the members of the General and Supervisory Board and their immediate relatives was Euro 1,562 thousand
Deposits
(December 31, 2020: Euro 1,293 thousand).
(i) members of the Executive Board of Directors and their immediate relatives was Euro 1,080 thousand; (December 31, 2020: Euro
1,312 thousand) and (ii) the members of the General and Supervisory Board and their immediate relatives was Euro 1,562 thousand
(December 31, 2020: Euro 1,293 thousand).
NOTE 41 – SECURITISATION OF ASSETS
As at 31 December 2021 and 2020, the amount of credit granted and deposits from Key Management
Personnel of novobanco was as follows:
Credit Granted
(i) to members of the Executive Board of Directors and their immediate relatives was Euro 317 thousand
(December 31, 2020: Euro 331 thousand); and (ii) members of the General and Supervisory Board and
their immediate relatives did not had credit granted (December 31, 2020: no exposure);
As at 31 December 2021 and 2020, the outstanding securisation transactions made by the Group were as follows
NOTE 41 – SECURITISATION OF ASSETS
Deposits
(i) members of the Executive Board of Directors and their immediate relatives was Euro 1,080 thousand;
(December 31, 2020: Euro 1,312 thousand) and (ii) the members of the General and Supervisory Board
and their immediate relatives was Euro 1,562 thousand (December 31, 2020: Euro 1,293 thousand).
NOTE 41 – SECURITISATION OF ASSETS
As at 31 December 2021 and 2020, the outstanding securisation transactions made by the Group were
as follows:
As at 31 December 2021 and 2020, the outstanding securisation transactions made by the Group were as follows
(in thousands of Euros)
Issue
Start date
Original amount
Lusitano Mortgages No.4 plc
Issue
Start date
September 2005
Original amount
1 200 000
Lusitano Mortgages No.5 plc
Lusitano Mortgages No.4 plc
Lusitano Mortgages No.6 plc
Lusitano Mortgages No.5 plc
Lusitano Mortgages No.7 plc
Lusitano Mortgages No.6 plc
September 2006
September 2005
July 2007
September 2006
September 2008
July 2007
1 400 000
1 200 000
1 100 000
1 400 000
1 900 000
1 100 000
Current amount
31.12.2021
31.12.2020
Current amount
Asset securitized
(in thousands of Euros)
31.12.2021
246 943
373 147
246 943
355 513
373 147
907 327
355 513
31.12.2020
280 051 Mortgage loans (general scheme)
Asset securitized
417 854 Mortgage loans (general scheme)
280 051 Mortgage loans (general scheme)
396 083 Mortgage loans (general scheme)
417 854 Mortgage loans (general scheme)
1 003 303 Mortgage loans (general scheme)
396 083 Mortgage loans (general scheme)
September 2008
Lusitano Mortgages No.7 plc
In accordance with the consolidation rules established in IFRS 10, Lusitano Mortgages No. 6 plc and Lusitano Mortgages No. 7 plc
are consolidated using the full consolidation method as from the date of their incorporation (see Note 1). The following are the main
impacts of the consolidation of these entities on the Group's accounts:
In accordance with the consolidation rules established in IFRS 10, Lusitano Mortgages No. 6 plc and Lusitano Mortgages No. 7 plc
(in thousands of Euros)
are consolidated using the full consolidation method as from the date of their incorporation (see Note 1). The following are the main
impacts of the consolidation of these entities on the Group's accounts:
1 003 303 Mortgage loans (general scheme)
31.12.2020
31.12.2021
1 900 000
907 327
In accordance with the consolidation rules established in IFRS 10, Lusitano Mortgages No. 6 plc and
Lusitano Mortgages No. 7 plc are consolidated using the full consolidation method as from the date
of their incorporation (see Note 1). The following are the main impacts of the consolidation of these
entities on the Group’s accounts:
Cash, cash balances at Central Banks and other demand deposits
Loans and advances to customers (net of impairment)
Liabilities represented by securities (a)
Cash, cash balances at Central Banks and other demand deposits
Loans and advances to customers (net of impairment)
(a) See note 33
Liabilities represented by securities (a)
121 856
1 255 063
31.12.2021
33 267
121 856
1 255 063
33 267
(in thousands of Euros)
122 769
1 390 316
31.12.2020
39 377
122 769
1 390 316
39 377
Additionally, Lusitano Mortgages No. 4 plc and Lusitano Mortgages No. 5 plc are not consolidated since they do not meet the rules
(a) See note 33
defined in IFRS 10, namely because the interest retained by the Group is residual.
Additionally, Lusitano Mortgages No. 4 plc and Lusitano Mortgages No. 5 plc are not consolidated since they do not meet the rules
defined in IFRS 10, namely because the interest retained by the Group is residual.
262
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 97 -
- 97 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The costs with remunerations and other benefits granted to Key Management Personnel of novobanco in 2021 and 2020, are as
follows:
Executive
Board of
Directors
31.12.2021
General and
Supervisory
Board
Total
Total
Executive
Board of
Directors
31.12.2020
General and
Supervisory
Board
(in thousands of Euros)
Short-term employment benefits
2 524
1 183
2 676
993
3 669
Post-employment benefits
Other long-term benefits
2
51
-
50
3
33
-
8
3
41
2 577
1 233
2 712
1 001
3 713
3 707
2
101
3 810
In 2021 and 2020, variable remuneration to the Executive Board of Directors amounted to Euro 1,600 thousand and Euro 1,860
thousand, respectively, which respects to the remuneration that does not constitute acquired rights of the respective members until
after the end of the restructuring period, and its payment is subject to approval and verification of certain conditions. Additionally, in
2020, costs of Euro 320 thousand were recorded as sign-on bonus resulting from the admission of a new Executive Director, and
compensations for the termination of the mandate of three Executive Directors were recorded in the amount of Euro 206 thousand.
As at 31 December 2021 and 2020, the amount of credit granted and deposits from Key Management Personnel of novobanco was
(i) to members of the Executive Board of Directors and their immediate relatives was Euro 317 thousand (December 31, 2020: Euro
331 thousand); and (ii) members of the General and Supervisory Board and their immediate relatives did not had credit granted
as follows:
Credit Granted
(December 31, 2020: no exposure);
Deposits
(i) members of the Executive Board of Directors and their immediate relatives was Euro 1,080 thousand; (December 31, 2020: Euro
1,312 thousand) and (ii) the members of the General and Supervisory Board and their immediate relatives was Euro 1,562 thousand
(December 31, 2020: Euro 1,293 thousand).
NOTE 41 – SECURITISATION OF ASSETS
As at 31 December 2021 and 2020, the outstanding securisation transactions made by the Group were as follows
Issue
Start date
Original amount
Asset securitized
Current amount
31.12.2021
31.12.2020
(in thousands of Euros)
Lusitano Mortgages No.4 plc
September 2005
1 200 000
280 051 Mortgage loans (general scheme)
Lusitano Mortgages No.5 plc
September 2006
Lusitano Mortgages No.6 plc
July 2007
1 400 000
1 100 000
Lusitano Mortgages No.7 plc
September 2008
1 900 000
246 943
373 147
355 513
907 327
417 854 Mortgage loans (general scheme)
396 083 Mortgage loans (general scheme)
1 003 303 Mortgage loans (general scheme)
In accordance with the consolidation rules established in IFRS 10, Lusitano Mortgages No. 6 plc and Lusitano Mortgages No. 7 plc
are consolidated using the full consolidation method as from the date of their incorporation (see Note 1). The following are the main
impacts of the consolidation of these entities on the Group's accounts:
Cash, cash balances at Central Banks and other demand deposits
Loans and advances to customers (net of impairment)
Liabilities represented by securities (a)
(a) See note 33
(in thousands of Euros)
31.12.2021
31.12.2020
121 856
1 255 063
33 267
122 769
1 390 316
39 377
Additionally, Lusitano Mortgages No. 4 plc and Lusitano Mortgages No. 5 plc are not consolidated since they do not meet the rules
defined in IFRS 10, namely because the interest retained by the Group is residual.
Additionally, Lusitano Mortgages No. 4 plc and Lusitano Mortgages No. 5 plc are not consolidated since
they do not meet the rules defined in IFRS 10, namely because the interest retained by the Group is
residual.
The main characteristics of these operations, as at 31 December 2021 and 2020, can be analysed as follows:
The main characteristics of these operations, as at 31 December 2021 and 2020, can be analysed as
follows:
(in thousands of Euros)
31.12.2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Bonds issued
Issue
Initial nominal
value
Current
nominal value
Interest held by
Group (Nominal
value)
Interest held by
Group (Book
value)
Maturity date
Initial rating of the bonds
Current rating of the bonds
Fitch
Moody's
S&P
DBRS
Fitch
- 97 -
Moody's
S&P
DBRS
Lusitano Mortgages No.4 plc
Lusitano Mortgages No.5 plc
Lusitano Mortgages No.6 plc
Lusitano Mortgages No.7 plc
Class A
Class B
Class C
Class D
Class E
Class A
Class B
Class C
Class D
Class E
Class A
Class B
Class C
Class D
Class E
Class F
Class A
Class B
Class C
Class D
1 134 000
22 800
19 200
24 000
10 200
1 323 000
26 600
22 400
28 000
11 900
943 250
65 450
41 800
17 600
31 900
22 000
1 425 000
294 500
180 500
57 000
189 071
12 515
10 539
13 174
5 100
277 689
22 729
19 141
23 926
11 301
189 723
65 450
41 800
17 600
31 900
22 000
437 435
294 500
180 500
57 000
-
-
-
-
-
-
-
-
-
-
157 956
63 950
41 800
17 600
31 900
22 000
437 434
294 500
180 500
57 000
-
-
-
-
-
-
-
-
-
-
152 431
61 124
33 936
12 388
8 568
-
409 580
266 902
121 349
-
December 2048 AAA
December 2048 AA
December 2048 A+
December 2048 BBB+
NA
December 2059
December 2059 AAA
December 2059 AA
December 2059 A
December 2059 BBB+
N/A
March 2060
March 2060 AAA
March 2060 AA
March 2060 A
March 2060 BBB
March 2060 BB
-
October 2064
October 2064
October 2064
October 2064
-
-
-
-
Aaa
Aa2
A1
Baa1
-
Aaa
Aa2
A1
Baa2
-
Aaa
Aa3
A3
Baa3
-
-
-
-
-
-
AAA
AA
A+
BBB-
NA
AAA
AA
A
BBB
N/A
AAA
AA
A
BBB
BB
-
AAA
BBB-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
A+
BBB+
BB+
CCC
-
A
BBB-
B
CC
-
AA
A
BB-
CCC
CC
-
AAA
-
-
-
-
-
-
-
Aa2
A2
Ba1
Caa1
-
Aa2
Baa2
Ba3
Caa3
-
Aa2
Aa2
A3
B3
-
-
-
-
-
-
AA
A-
BBB-
B-
-
AA
AA
BBB
B
-
A-
A-
A-
B
D
-
AA
A
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
AAA
-
-
-
31.12.2020
(in thousands of Euros)
Issue
Bonds issued
Initial nominal
value
Current
nominal value
Interest held by
Group (Nominal
value)
Interest held by
Group (Book
value)
Maturity date
Initial rating of the bonds
Current rating of the bonds
Fitch
Moody's
S&P
DBRS
Fitch
Moody's
S&P
DBRS
Lusitano Mortgages No.4 plc
Lusitano Mortgages No.5 plc
Lusitano Mortgages No.6 plc
Lusitano Mortgages No.7 plc
Class A
Class B
Class C
Class D
Class E
Class A
Class B
Class C
Class D
Class E
Class A
Class B
Class C
Class D
Class E
Class F
Class A
Class B
Class C
Class D
1 134 000
22 800
19 200
24 000
10 200
1 323 000
26 600
22 400
28 000
11 900
943 250
65 450
41 800
17 600
31 900
22 000
1 425 000
294 500
180 500
57 000
214 891
14 224
11 978
14 973
5 100
311 465
25 494
21 469
26 836
11 900
235 906
65 450
41 800
17 600
31 900
22 000
528 003
294 500
180 500
57 000
-
-
-
-
-
-
-
-
-
-
188 337
63 950
41 800
17 600
31 900
22 000
528 003
294 500
180 500
57 000
-
-
-
-
-
-
-
-
-
-
December 2048 AAA
December 2048 AA
December 2048 A+
December 2048 BBB+
December 2048 NA
December 2059 AAA
December 2059 AA
December 2059 A
December 2059 BBB+
December 2059 N/A
180 754
52 775
32 562
11 906
8 458
-
488 778
265 146
116 051
-
March 2060 AAA
March 2060 AA
March 2060 A
March 2060 BBB
March 2060 BB
-
March 2060
October 2064
October 2064
October 2064
October 2064
-
-
-
-
Aaa
Aa2
A1
Baa1
-
Aaa
Aa2
A1
Baa2
-
Aaa
Aa3
A3
Baa3
-
-
-
-
-
-
AAA
AA
A+
BBB-
NA
AAA
AA
A
BBB
N/A
AAA
AA
A
BBB
BB
-
AAA
BBB-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
BB
BB
BB
CCC
-
BB
BB
B
CC
-
A
BBB-
B
CCC
CC
-
AAA
-
-
-
-
-
-
-
Aa3
Baa1
Ba3
Caa3
-
A1
Baa3
B3
Ca
-
Aa3
Baa1
Ba3
Caa3
-
-
-
-
-
-
AA
BB+
B+
B-
-
AA
A
BBB
B
-
A-
A-
BBB+
CCC
D
-
AA
BBB
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
AAA
-
-
-
NOTE 42 – FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
The governance model of the valuation of the Group's financial instruments is defined in internal regulations, which establish the
policies and procedures to be followed in the identification and valuation of financial instruments, the control procedures and the
definition of the responsibilities of the parties involved in this process.
The fair value of listed financial assets is determined based on the closing price (bid-price), the price of the last transaction made or
the value of the last known price (bid). In the absence of quotation, the Group estimates fair value using (i) valuation methodologies,
such as the use of prices for recent transactions, similar and carried out under market conditions, discounted cash flow techniques
and customized option valuation models. in order to reflect the particularities and circumstances of the instrument and (ii) valuation
assumptions based on market information.
For the assets included in the level 3 of fair value hierarchy, whose quotation is provided by a third-party using parameters not
observable in the market, the Group proceeds, when applicable, to a detailed analysis of the historical and liquidity performance of
these assets, which may imply an additional adjustment to its fair value, as well as a result of additional internal or external valuations.
The valuation models used by type of instrument are as follows:
Money market operations and loans and advances to customers: fair value is determined by the discounted cash flows method, with
future cash flow being discounted considering the currency yield curve plus the credit risk of the entity contractually liquidating that
flow.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 98 -
263
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 42 – FAIR VALUE OF FINANCIAL ASSETS
AND LIABILITIES
Convertible bonds: the cash flows are discounted considering the interest rate risk, the issuer’s credit
risk and any other risks that may be associated with the instrument, increased by the net present value
(NPV) of the convertibility options embedded in the instrument.
The governance model of the valuation of the Group’s financial instruments is defined in internal
regulations, which establish the policies and procedures to be followed in the identification and
valuation of financial instruments, the control procedures and the definition of the responsibilities of
the parties involved in this process.
The fair value of listed financial assets is determined based on the closing price (bid-price), the price
of the last transaction made or the value of the last known price (bid). In the absence of quotation,
the Group estimates fair value using (i) valuation methodologies, such as the use of prices for recent
transactions, similar and carried out under market conditions, discounted cash flow techniques and
customized option valuation models. in order to reflect the particularities and circumstances of the
instrument and (ii) valuation assumptions based on market information.
For the assets included in the level 3 of fair value hierarchy, whose quotation is provided by a third-party
using parameters not observable in the market, the Group proceeds, when applicable, to a detailed
analysis of the historical and liquidity performance of these assets, which may imply an additional
adjustment to its fair value, as well as a result of additional internal or external valuations.
The valuation models used by type of instrument are as follows:
Money market operations and loans and advances to customers: fair value is determined by the
discounted cash flows method, with future cash flow being discounted considering the currency yield
curve plus the credit risk of the entity contractually liquidating that flow.
Commercial paper: its fair value is determined by discounting future cash flows considering the currency
yield curve plus the credit risk of the issuer determined in the issuance program.
Debt instruments (bonds) with liquidity: the selective independent valuation methodology is used
based on observations available on Bloomberg, designated as ‘Best Price’, where all the valuations
available are requested, but only previously validated sources considered as input, with the model
excluding prices due to seniority and outlier prices. In the specific case of the Portuguese sovereign
debt, and due to the market making activity and the materiality of the Group’s positions, the CBBT
source valuations are always considered (the CBBT is a composite of valuations prepared by Bloomberg,
which considers the average of executable prices with high liquidity).
Debt instruments (bonds) with reduced liquidity: the models considered for the valuation of
low liquidity bonds without observable market valuations are determined taking into account the
information available on the issuer and the instrument, with the following models being considered:
(i) discounted cash flows - cash flows are discounted considering the interest rate risk, credit risk of
the issuer and any other risks subjacent to the instrument; or (ii) valuations made available by external
counterparties, when it is impossible to determine the fair value of the instrument, with the selection
always falling on reliable sources with reputed credibility in the market and impartiality in the valuation
of the instruments being analysed.
Shares and quoted funds: for quoted market products, the quotation on the respective stock exchange
is considered.
Unquoted Shares: the valuation is carried out using external valuations made of the companies in
which the shareholding is held. In the event the request for an external valuation is not justified due
to the immateriality of this position in the balance sheet, the position is revalued considering the book
value of the entity.
Unquoted funds: the valuation considered is that provided by the fund’s management company.
In the event there are calls for capital after the reference date of the last available valuation, the
valuation is recalculated considering the capital calls subsequent to the reference date at the amount
at which these were made, until a new valuation is made available by the management company,
already considering the capital calls realised. Note that although the valuations made available by the
management companies are accepted, whenever applicable in accordance with the fund regulations,
the Group requests the legal certification of accounts issued by independent auditors, in order to obtain
the necessary additional comfort to the information made available by the management company.
Additionally, and for the largest assets held by real estate investment funds, and according to an annual
work plan previously approved by the Executive Board of Directors, a process of challenge to their
valuations is carried out, consisting of a detailed technical analysis of the main assumptions considered
in the valuations. This process may lead to the need for new valuations, as well as adjustments to the
fair value of these assets.
In the specific case of the Restructuring Funds (“Assessed Assets”), their assessment was carried
out during the period of 2020 by an independent external international entity (“Appraiser”), which
engaged renowned real estate appraisal companies to determine the fair value of real estate assets,
which represent a significant part of the funds’ portfolio.
The fair vale estimation Assessed Assets requires a multi-step approach, taking into account the
following (i) The fair value of the assets invested by each fund (the “Underlying Assets”); (ii) The nature
of the participation of the respective Fund in each of the Underlying Assets; (iii) The other assets and
liabilities on the Fund’s balance; (iv) The nature of novobanco’s investment in each of the funds; and
(v) Consideration of any applicable discounts or premiums. The fair value of the Underlying Assets was
estimated using three valuation approaches (market, income and cost) depending, among other things,
on the specific nature of each asset, its state of development, the information available and the date of
the initial investment. The other assets and liabilities in the fund’s balances would normally be valued
using the cost approach, with potential adjustments based on the market, and the consideration of
discounts and premiums, normally assessed using market data and benchmarks.
Underlying assets are mainly divided into Non-Real Estate assets and Real Estate assets (which can
be subdivided into Hotels and Other Real Estate assets). For Non-Real Estate Assets, the Appraiser
considered the Market approach based essentially on Market Multiples for comparable assets and
considering the historical performance of each asset. For Real Estate Assets, the appraiser considered
264
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes either the market approach or the income approach, depending on the state of each asset. In the case
of hotels, the main value-based assumptions considered were the average room rate, the occupancy
rate, the GOP margin, the EBITDA margin, the Capex needs and the discount rate. In relation to Other
Real Estate Assets, the main assumptions of value were sales prices, construction costs, timeline (both
to development and sale) and Discount Rates. Each of the assumptions described above considered
in the valuation of real estate assets was determined from asset to asset (total of 149 major assets
subdivided into a total of more than 1,000 assets), depending on the status of the asset, the asset’s
historical performance, location and market competitors.
With regard to information on quantitative indicators underlying the fair value measurements of the Restructuring Funds, the following
is presented:
With regard to information on quantitative indicators underlying the fair value measurements of the
Restructuring Funds, the following is presented:
Assumption
Hotels
Real Estate under
development
Real Estate
Commercial Centres
Agriculture properties
Min
Average Max
Min
Average Max
Min
Average Max
Min
Average Max
Min
Average Max
Bedroom average rate (€)
With regard to information on quantitative indicators underlying the fair value measurements of the Restructuring Funds, the following
n.a.
is presented:
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
207
177
497
145
51
95
n.a.
Occupancy rate %
40%
58%
78%
54%
66%
75%
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
€/square meter
Assumption
Hotels
n.a.
n.a.
Min
n.a.
Average Max
Real Estate under
development
3 227
6 059
Average Max
30
Min
173
Min
Real Estate
2 024
Average Max
4 610
Commercial Centres
3 460
1 007
Min
Average Max
Agriculture properties
n.a.
n.a.
Average Max
4 560
Min
n.a.
€/Ha
Bedroom average rate (€)
n.a.
n.a.
51
n.a.
177
n.a.
497
95
n.a.
145
n.a.
207
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3 954
n.a.
23 088
n.a.
77 296
Discount rate
Occupancy rate %
7.5%
8.2% 10.6%
40%
58%
78%
8.1% 12.1% 20.0%
54%
66%
75%
5.0%
n.a.
6.0%
n.a.
7.0%
n.a.
n.a.
9.3%
n.a.
9.7% 10.6%
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
€/square meter
Valuation methodology
€/Ha
Notes:
Discount rate
n.a.
n.a.
Market approach
Income approach
n.a.
n.a.
n.a.
n.a.
30
3 227
Market approach
Income approach
n.a.
n.a.
6 059
n.a.
2 024
173
Market approach
Income approach
n.a.
n.a.
4 610
1 007
n.a.
n.a.
3 460
4 560
Market approach
Income approach
n.a.
n.a.
n.a.
3 954
n.a.
n.a.
Market approach
Income approach
23 088
77 296
7.5%
8.2% 10.6%
8.1% 12.1% 20.0%
5.0%
6.0%
7.0%
9.3%
9.7% 10.6%
n.a.
n.a.
n.a.
Notes:
Valuation methodology
Market approach
Income approach
1. all assumptions presented above were calculated based on the averages of the values considered by the external appraisers per appraised
property.
2.The average presented was calculated on the weighted average per property in the sum of the value of the underlying assets per category
presented
3.Hotel - Includes hotels and aparthotels currently in operation (Hotels under development or project are incorporated in Real Estate u nder
1. all assumptions presented above were calculated based on the averages of the values considered by the external appraisers per appraised
Development along with their respective property
property.
4. €/m2 considers the gross construction area
2.The average presented was calculated on the weighted average per property in the sum of the value of the underlying assets per category
presented
3.Hotel - Includes hotels and aparthotels currently in operation (Hotels under development or project are incorporated in Real Estate u nder
Development along with their respective property
4. €/m2 considers the gross construction area
In addition, additional assumptions considered in the fair value measurement of the financial investments held in the restruc turing
funds are presented below:
Market approach
Income approach
Market approach
Income approach
Market approach
Income approach
Market approach
Income approach
In addition, additional assumptions considered in the fair value measurement of the financial
investments held in the restructuring funds are presented below:
In addition, additional assumptions considered in the fair value measurement of the financial investments held in the restruc turing
funds are presented below:
Type of Fund
Discount based on P/BV
observable market data
Type of Fund
Real estate and Tourism
Real estate and Tourism/Other
Real estate and Tourism
Other
Real estate and Tourism/Other
Discount based on P/BV
observable market data
14.5%
13.6%
14.5%
10.6%
13.6%
In 2021, and as had been done in 2020, the observable movement in terms of the evolution of market prices of funds, companies
and assets considered comparable to the underlying assets was considered to obtain an objective estimate of the evolution of the
In 2021, and as had been done in 2020, the observable movement in terms of the evolution of market prices of funds, companies
fair value of these assets between December 31, 2020 and December 31, 2021.
and assets considered comparable to the underlying assets was considered to obtain an objective estimate of the evolution of the
fair value of these assets between December 31, 2020 and December 31, 2021.
Other
10.6%
265
Derivative instruments: if these are traded on organised markets, the valuations are observable in the market, otherwise these are
valued using standard models and relying on observable variables in the market, namely:
Derivative instruments: if these are traded on organised markets, the valuations are observable in the market, otherwise these are
valued using standard models and relying on observable variables in the market, namely:
Foreign currency options: are valued through the front office system, which considers models such as Garman -Kohlhagen,
Foreign currency options: are valued through the front office system, which considers models such as Garman -Kohlhagen,
Binomial, Black & Scholes, Levy or Vanna-Volga;
Binomial, Black & Scholes, Levy or Vanna-Volga;
Interest rate swaps and foreign currency swaps: the valuation of these instruments is done through the front office system, where
Interest rate swaps and foreign currency swaps: the valuation of these instruments is done through the front office system, where
the fixed leg cash flows of the instrument are discounted based on the yield curve of the respective currency, and the cash flows
the fixed leg cash flows of the instrument are discounted based on the yield curve of the respective currency, and the cash flows
of the variable leg are projected considering the forward curve and discounted, also considering discount factors and forward
of the variable leg are projected considering the forward curve and discounted, also considering discount factors and forward
rates based on the yield curve of the respective currency;
rates based on the yield curve of the respective currency;
Credit Default Swaps (CDS): both legs of the CDS are composed of cash flows contingent on the credit risk of the underlying
Credit Default Swaps (CDS): both legs of the CDS are composed of cash flows contingent on the credit risk of the underlying
asset and are therefore valued using market credit spreads;
asset and are therefore valued using market credit spreads;
Futures and Options: the Group trades these products on an organised market, but also has the possibility to trade them on th e
Futures and Options: the Group trades these products on an organised market, but also has the possibility to trade them on th e
OTC market. For futures and options traded on an organised market, the valuations are observable in the market, with the
OTC market. For futures and options traded on an organised market, the valuations are observable in the market, with the
valuation being received daily through the broker selected for these products. For futures and options traded on the OTC mark et,
valuation being received daily through the broker selected for these products. For futures and options traded on the OTC mark et,
and depending on the type of product and the underlying asset type, discrete time (binominal) or continuous time (Black &
and depending on the type of product and the underlying asset type, discrete time (binominal) or continuous time (Black &
Scholes) models may be used.
Scholes) models may be used.
The Group calculates the Credit Valuation Adjustment (CVA) for derivative instruments in accordance with the following method ology:
The Group calculates the Credit Valuation Adjustment (CVA) for derivative instruments in accordance with the following method ology:
expected loss and a recovery rate, considering the average duration period estimated for each exposure; (ii) Individual basis – the
(i) Portfolio basis – the calculation of the CVA corresponds to the application, to the aggregate exposure of each counterpart, of an
(i) Portfolio basis – the calculation of the CVA corresponds to the application, to the aggregate exposure of each counterpart, of an
calculation of the CVA on an individual basis is based on the determination of the exposure using stochastic methods (Expected
expected loss and a recovery rate, considering the average duration period estimated for each exposure; (ii) Individual basis – the
Positive Exposure) which translates into the calculation of the expected fair value exposure that each derivative is likely t o assume
calculation of the CVA on an individual basis is based on the determination of the exposure using stochastic methods (Expected
over its remaining life. Subsequently, are applied to the exposure determined, an expected loss and a recovery rate.
Positive Exposure) which translates into the calculation of the expected fair value exposure that each derivative is likely t o assume
over its remaining life. Subsequently, are applied to the exposure determined, an expected loss and a recovery rate.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 101 -
- 101 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
In 2021, and as had been done in 2020, the observable movement in terms of the evolution of market
prices of funds, companies and assets considered comparable to the underlying assets was considered
to obtain an objective estimate of the evolution of the fair value of these assets between December
31, 2020 and December 31, 2021.
Derivative instruments: if these are traded on organised markets, the valuations are observable in the
market, otherwise these are valued using standard models and relying on observable variables in the
market, namely:
• Foreign currency options: are valued through the front office system, which considers models such
as Garman-Kohlhagen, Binomial, Black & Scholes, Levy or Vanna-Volga;
•
Interest rate swaps and foreign currency swaps: the valuation of these instruments is done through
the front office system, where the fixed leg cash flows of the instrument are discounted based
on the yield curve of the respective currency, and the cash flows of the variable leg are projected
considering the forward curve and discounted, also considering discount factors and forward rates
based on the yield curve of the respective currency;
• Credit Default Swaps (CDS): both legs of the CDS are composed of cash flows contingent on the
credit risk of the underlying asset and are therefore valued using market credit spreads;
• Futures and Options: the Group trades these products on an organised market, but also has the
possibility to trade them on the OTC market. For futures and options traded on an organised market,
the valuations are observable in the market, with the valuation being received daily through the
broker selected for these products. For futures and options traded on the OTC market, and depending
on the type of product and the underlying asset type, discrete time (binominal) or continuous time
(Black & Scholes) models may be used.
The Group calculates the Credit Valuation Adjustment (CVA) for derivative instruments in accordance
with the following methodology: (i) Portfolio basis – the calculation of the CVA corresponds to the
application, to the aggregate exposure of each counterpart, of an expected loss and a recovery
rate, considering the average duration period estimated for each exposure; (ii) Individual basis – the
calculation of the CVA on an individual basis is based on the determination of the exposure using
stochastic methods (Expected Positive Exposure) which translates into the calculation of the expected
fair value exposure that each derivative is likely to assume over its remaining life. Subsequently, are
applied to the exposure determined, an expected loss and a recovery rate.
The Group chooses not to register “Debt Valuation Adjustment” (DVA), which represents the market
value of own credit risk of the group of a certain negative exposure to a counterparty, reflecting a
prudent perspective of application of this regulation. It should be noted that the exposure potentially
subject to DVA is controlled on a monthly basis and has assumed immaterial values.
Investment properties: its fair value is determined based on periodic evaluations carried out by
independent entities specialized in this type of service, however, given the subjectivity of some
assumptions used in the assessments, the Group carries out internal analysis on the assumptions
used, which may imply additional adjustments to fair value, supported by additional internal or external
valuations (see accounting policy in Note 7.19). The market value of properties for which a promissory
purchase and sale agreement has been entered into corresponds to the value of that contract.
Validation of the valuation of financial instruments is performed by an independent area, which validates
the models used and the prices attributed. More specifically, this area is responsible for independent
price verification for mark-to-market valuations, for mark-to-model valuations, validates the models
used and changes to them wherever they exist. For prices supplied by external entities, the validation
performed consists in confirming the use of the correct price.
The fair value of financial assets and liabilities and non-financial assets (investment properties)
measured at fair value of the Group is as follows:
266
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes The Group chooses not to register "Debt Valuation Adjustment" (DVA), which represents the market value of own credit risk of the
group of a certain negative exposure to a counterparty, reflecting a prudent perspective of application of this regulation. It should be
noted that the exposure potentially subject to DVA is controlled on a monthly basis and has assumed immaterial values.
Investment properties: its fair value is determined based on periodic evaluations carried out by independent entities specialized in
this type of service, however, given the subjectivity of some assumptions used in the assessments, the Group carries out inte rnal
analysis on the assumptions used, which may imply additional adjustments to fair value, supported by additional internal or external
valuations (see accounting policy in Note 7.19). The market value of properties for which a promissory purchase and sale agreement
has been entered into corresponds to the value of that contract.
Validation of the valuation of financial instruments is performed by an independent area, which validates the models used and the
prices attributed. More specifically, this area is responsible for independent price verification for mark -to-market valuations, for mark-
to-model valuations, validates the models used and changes to them wherever they exist. For prices supplied by external entities ,
the validation performed consists in confirming the use of the correct price.
The fair value of financial assets and liabilities and non-financial assets (investment properties) measured at fair value of the Group
is as follows:
31 December 2021
Financial assets held for trading
Securities held for trading
Bonds issued by public entities
Derivatives held for trading
Exchange rate contracts
Interest rate contracts
Others
Financial assets mandatorily at fair value through profit or loss
Bonds issued by other entities
Shares
Other variable income securities
Financial assets at fair value through other comprehensive income
Bonds issued by public entities
Bonds issued by other entities
Shares
Derivatives - Hedge Accounting
Interest rate contracts
Investment properties
Assets at fair value
Financial liabilities held for trading
Derivatives held for trading
Exchange rate contracts
Interest rate contracts
Other
Derivatives - Hedge Accounting
Interest rate contracts
Liabilities at fair value
At Fair Value
(in thousands of Euros)
Quoted market
prices
Valuation models
based on observable
market parameters
Valuation models
based on
unobservable market
parameters
Total Fair Value
(Level 1)
(Level 2)
(Level 3)
114 465
114 465
114 465
-
-
-
-
190 252
52 532
137 607
113
7 167 814
5 761 717
1 398 899
7 198
-
-
-
7 472 531
-
-
-
-
-
-
-
-
263 199
-
-
263 199
29 127
225 186
8 886
22 890
50
-
22 840
9 958
-
-
9 958
19 639
19 639
-
315 686
304 104
304 104
34 910
266 012
3 182
44 460
44 460
348 564
-
-
-
-
-
-
-
586 450
2 378
290 279
293 793
43 224
-
-
43 224
-
-
625 187
377 664
114 465
114 465
263 199
29 127
225 186
8 886
799 592
54 960
427 886
316 746
7 220 996
5 761 717
1 398 899
60 380
19 639
19 639
625 187
1 254 861
9 043 078
1 950
1 950
-
1 950
-
-
-
1 950
306 054
306 054
34 910
267 962
3 182
44 460
44 460
350 514
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 102 -
267
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
31 December 2020
Financial assets held for trading
Securities held for trading
Bonds issued by public entities
Derivatives held for trading
Exchange rate contracts
Interest rate contracts
Others
Financial assets mandatorily at fair value through profit or loss
Bonds issued by other entities
Shares
Other variable income securities
Financial assets at fair value through other comprehensive income
Bonds issued by public entities
Bonds issued by other entities
Shares
Other variable income securities
Derivatives - Hedge Accounting
Interest rate contracts
Investment properties
(in thousands of Euros)
Quoted market
prices
At Fair Value
Valuation models
based on
observable market
parameters
Valuation models
based on
unobservable
market
parameters
(Level 1)
(Level 2)
(Level 3)
Total Fair Value
267 016
267 016
267 016
-
-
-
-
214 882
82 203
132 525
154
7 854 337
6 490 076
1 352 759
11 502
-
-
-
-
388 257
-
-
388 257
57 205
319 662
11 390
36 849
50
-
36 799
10 028
-
-
10 028
-
12 972
12 972
-
-
-
-
-
-
-
-
709 231
77 931
273 579
357 721
43 222
-
-
43 222
-
-
-
592 605
655 273
267 016
267 016
388 257
57 205
319 662
11 390
960 962
160 184
406 104
394 674
7 907 587
6 490 076
1 352 759
64 752
-
12 972
12 972
592 605
Assets at fair value
8 336 235
448 106
1 345 058
10 129 399
Financial liabilities held for trading
Derivatives held for trading
Exchange rate contracts
Interest rate contracts
Credit default contracts
Other
Derivatives - Hedge Accounting
Interest rate contracts
Liabilities at fair value
-
-
-
-
-
-
-
-
-
552 633
552 633
45 493
501 585
16
5 539
72 543
72 543
625 176
2 158
2 158
-
2 158
-
-
-
-
2 158
554 791
554 791
45 493
503 743
16
5 539
72 543
72 543
627 334
The changes occurred in financial assets and financial liabilities valued based on non-observable market information (level 3 of the
fair value hierarchy) during the financial years of 2021 and 2020, can be analysed as follows:
The changes occurred in financial assets and financial liabilities valued based on non-observable market
information (level 3 of the fair value hierarchy) during the financial years of 2021 and 2020, can be
analysed as follows:
31.12.2021
Financial assets held for trading
Derivatives
held for trading
Economic hedging
derivatives
Financial assets
mandatorily at fair
value through
profit or loss
Financial assets at
fair value through
other
comprehensive
income
Investment
properties
Total assets
(in thousands of Euros)
Financial liabilities
held for trading
Derivatives held for
trading
Total liabilities
Balance as at 31 December 2020
Acquisitions
Attainment of maturity
Settlements
Disposals
Changes in value
Other movements
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
709 231
11 200
( 22 352)
( 122 743)
-
-
43 222
556
-
( 4 247)
-
-
592 605
1 345 058
4 973
-
-
( 49 727)
31 179
46 157
16 729
( 22 352)
( 126 990)
( 49 727)
40 935
46 157
2 158
24 117
-
( 24 117)
-
-
2 158
24 117
-
( 24 117)
-
-
8 363
1 393
( 208)
( 208)
Balance as at 31 December 2021
586 450
43 224
625 187
1 254 861
1 950
1 950
268
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 103 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Financial assets mandatorily at fair value through profit or loss
Financial assets at fair value through other comprehensive income
31 December 2020
Financial assets held for trading
Securities held for trading
Bonds issued by public entities
Derivatives held for trading
Exchange rate contracts
Interest rate contracts
Others
Bonds issued by other entities
Shares
Other variable income securities
Bonds issued by public entities
Bonds issued by other entities
Shares
Other variable income securities
Derivatives - Hedge Accounting
Interest rate contracts
Investment properties
Financial liabilities held for trading
Derivatives held for trading
Exchange rate contracts
Interest rate contracts
Credit default contracts
Other
Derivatives - Hedge Accounting
Interest rate contracts
Liabilities at fair value
(in thousands of Euros)
At Fair Value
Valuation models
Quoted market
based on
prices
observable market
parameters
(Level 1)
(Level 2)
Valuation models
based on
market
parameters
(Level 3)
unobservable
Total Fair Value
267 016
267 016
267 016
214 882
82 203
132 525
154
7 854 337
6 490 076
1 352 759
11 502
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
388 257
388 257
57 205
319 662
11 390
36 849
50
36 799
10 028
10 028
12 972
12 972
-
-
-
-
-
-
-
552 633
552 633
45 493
501 585
16
5 539
72 543
72 543
625 176
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
709 231
77 931
273 579
357 721
43 222
43 222
592 605
2 158
2 158
2 158
2 158
655 273
267 016
267 016
388 257
57 205
319 662
11 390
960 962
160 184
406 104
394 674
7 907 587
6 490 076
1 352 759
64 752
-
12 972
12 972
592 605
554 791
554 791
45 493
503 743
16
5 539
72 543
72 543
627 334
Assets at fair value
8 336 235
448 106
1 345 058
10 129 399
The changes occurred in financial assets and financial liabilities valued based on non-observable market information (level 3 of the
fair value hierarchy) during the financial years of 2021 and 2020, can be analysed as follows:
Financial assets held for trading
Derivatives
held for trading
Economic hedging
derivatives
Financial assets
mandatorily at fair
value through
profit or loss
Financial assets at
fair value through
other
comprehensive
income
Investment
properties
Total assets
31.12.2021
(in thousands of Euros)
Financial liabilities
held for trading
Derivatives held for
trading
Total liabilities
Balance as at 31 December 2020
Acquisitions
Attainment of maturity
Settlements
Disposals
Changes in value
Other movements
Balance as at 31 December 2021
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
709 231
11 200
( 22 352)
( 122 743)
-
8 363
-
586 450
43 222
592 605
1 345 058
556
-
( 4 247)
-
1 393
-
4 973
-
-
( 49 727)
31 179
46 157
16 729
( 22 352)
( 126 990)
( 49 727)
40 935
46 157
2 158
24 117
-
( 24 117)
-
( 208)
-
2 158
24 117
-
( 24 117)
-
( 208)
-
43 224
625 187
1 254 861
1 950
1 950
Financial assets held for trading
Financial assets held for trading
Derivatives
Derivatives
held for trading
held for trading
Economic hedging
Economic hedging
derivatives
derivatives
Financial assets
Financial assets
mandatorily at fair
mandatorily at fair
value through
value through
profit or loss
profit or loss
Financial assets at
Financial assets at
fair value through
fair value through
other
other
comprehensive
comprehensive
income
income
Investment
Investment
properties
properties
Total assets
Total assets
31.12.2020
31.12.2020
191
191
-
-
-
-
-
-
-
-
-
-
-
-
( 191)
( 191)
-
-
-
-
74 093
74 093
-
-
-
-
( 80 489)
( 80 489)
-
-
-
-
-
-
6 396
6 396
-
-
-
-
1 142 664
1 142 664
8 479
8 479
( 41 302)
( 41 302)
( 1 583)
( 1 583)
-
-
( 27 541)
( 27 541)
-
-
( 371 486)
( 371 486)
-
-
709 231
709 231
37 179
37 179
5 125
5 125
-
-
( 22 913)
( 22 913)
16 326
16 326
( 2 685)
( 2 685)
-
-
10 190
10 190
-
-
43 222
43 222
700 744
700 744
11 966
11 966
-
-
-
-
-
-
-
-
( 67 581)
( 67 581)
( 101 828)
( 101 828)
49 304
49 304
592 605
592 605
1 954 871
1 954 871
25 570
25 570
( 41 302)
( 41 302)
( 104 985)
( 104 985)
16 326
16 326
( 30 226)
( 30 226)
( 67 581)
( 67 581)
( 456 919)
( 456 919)
49 304
49 304
1 345 058
1 345 058
(in thousands of Euros)
(in thousands of Euros)
Financial liabilities
Financial liabilities
held for trading
held for trading
Derivatives held for
Derivatives held for
trading
trading
Total liabilities
Total liabilities
1 837
1 837
-
-
-
-
-
-
-
-
-
-
-
-
321
- 103 -
321
-
-
2 158
2 158
1 837
1 837
-
-
-
-
-
-
-
-
-
-
-
-
321
321
-
-
2 158
2 158
Balance as at 31 December 2019
Balance as at 31 December 2019
Acquisitions
Acquisitions
Attainment of maturity
Attainment of maturity
Settlements
Settlements
Transfers in
Transfers in
Transfers out
Transfers out
Disposals
Disposals
Changes in value
Changes in value
Other movements
Other movements
Balance as at 31 December 2020
Balance as at 31 December 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In fiscal years 2021 and 2020 there were no significant transfers of value between the different levels of the fair value hierarchy.
In fiscal years 2021 and 2020 there were no significant transfers of value between the different levels of the fair value hierarchy.
In fiscal years 2021 and 2020 there were no significant transfers of value between the different levels
of the fair value hierarchy.
Potential gains and losses on financial instruments and investment property classified at level 3 of the fair value hierarchy are recorded
Potential gains and losses on financial instruments and investment property classified at level 3 of the fair value hierarchy are recorded
in profit or loss or revaluation reserves in accordance with the respective asset accounting policy. The amounts calculated at 31
in profit or loss or revaluation reserves in accordance with the respective asset accounting policy. The amounts calculated at 31
December 2021 and 2020 were as follows:
December 2021 and 2020 were as follows:
the fair value hierarchy are recorded in profit or loss or revaluation reserves in accordance with the
respective asset accounting policy. The amounts calculated at 31 December 2021 and 2020 were as
follows:
Potential gains and losses on financial instruments and investment property classified at level 3 of
Derivatives held for trading
Derivatives held for trading
Economic hedging derivatives
Economic hedging derivatives
Financial assets mandatorily at fair value through profit or loss
Financial assets mandatorily at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income
Investment properties
Investment properties
(in thousands of Euros)
(in thousands of Euros)
Recognised in
Recognised in
reserves
reserves
31.12.2021
31.12.2021
Recognised in the
Recognised in the
income statement
income statement
Total
Total
Recognised in
Recognised in
reserves
reserves
31.12.2020
31.12.2020
Recognised in the
Recognised in the
income statement
income statement
-
-
-
-
-
-
9 122
9 122
-
-
9 122
9 122
144
144
( 24 117)
( 24 117)
21 662
21 662
-
-
31 182
31 182
28 871
28 871
144
144
( 24 117)
( 24 117)
21 662
21 662
9 122
9 122
31 182
31 182
37 993
37 993
-
-
-
-
-
-
10 905
10 905
-
-
10 905
10 905
23 605
23 605
( 68 722)
( 68 722)
( 359 642)
( 359 642)
-
-
( 104 310)
( 104 310)
( 509 390)
( 509 390)
Total
Total
23 605
23 605
( 68 722)
( 68 722)
( 359 642)
( 359 642)
10 905
10 905
( 104 310)
( 104 310)
( 498 485)
( 498 485)
The following table presents, for financial assets included in level 3 of the fair value hierarchy, the main valuation methods used and
The following table presents, for financial assets included in level 3 of the fair value hierarchy, the main valuation methods used and
the impact of changing the main variables used in their valuation, when applicable:
the impact of changing the main variables used in their valuation, when applicable:
(in millions of Euros)
(in millions of Euros)
269
31.12.2021
31.12.2021
586.5
586.5
2.4
2.4
290.3
290.3
287.5
287.5
2.8
2.8
293.8
293.8
236.5
236.5
57.3
57.3
43.2
43.2
43.2
43.2
16.2
16.2
27.0
27.0
629.7
629.7
Management company adjusted
Management company adjusted
Management company adjusted
Management company adjusted
Management company adjusted
Management company adjusted
valuation
valuation
Others
Others
valuation
valuation
valuation
valuation
Others
Others
(b)
(b)
(a)
(a)
(b)
(b)
(c)
(c)
(a)
(a)
Discounted cash flows
Discounted cash flows
Renewable Energy Tariff
Renewable Energy Tariff
Financial assets mandatorily at fair value through
Financial assets mandatorily at fair value through
profit or loss
profit or loss
Obligations of other issuers
Obligations of other issuers
Shares
Shares
Other variable income securities
Other variable income securities
Financial assets at fair value through other
Financial assets at fair value through other
comprehensive income
comprehensive income
Shares
Shares
Total
Total
the quotation by the entity
the quotation by the entity
Assets classified under level 3
Assets classified under level 3
Valuation Model
Valuation Model
Variable analysed
Variable analysed
Carrying
Carrying
book value
book value
Unfavorable scenario
Unfavorable scenario
Change
Change
Impact
Impact
Favorable scenario
Favorable scenario
Change
Change
Impact
Impact
Cash flow discount model
Cash flow discount model
Specific Impairment
Specific Impairment
-50%
-50%
( 2.4)
( 2.4)
( 2.4)
( 2.4)
+50%
+50%
-
-
-
-
-
-
-
-
-
-
-
-
( 2.9)
( 2.9)
( 2.9)
( 2.9)
( 2.9)
( 2.9)
-
-
( 5.3)
( 5.3)
4.8
4.8
4.8
4.8
-
-
-
-
-
-
-
-
-
-
-
-
0.1
0.1
0.1
0.1
0.1
0.1
-
-
4.9
4.9
(a) No sensitivity analysis was carried out for these categories as these include securities of an individually immaterial value.
(a) No sensitivity analysis was carried out for these categories as these include securities of an individually immaterial value.
(b) For the sensitivity analysis carried out on the valuation of the Restructuring Funds, taking into account the valuation methodologies applied and considering that real estate assets represent more than 95% of the underlying assets of the Funds, a
(b) For the sensitivity analysis carried out on the valuation of the Restructuring Funds, taking into account the valuation methodologies applied and considering that real estate assets represent more than 95% of the underlying assets of the Funds, a
variation of + 10% was considered and -10% in the fair value of the main real estate assets of each Fund, which leads to an impact of + 6.15% and -5.8% in the fair value of the restructuring funds.
variation of + 10% was considered and -10% in the fair value of the main real estate assets of each Fund, which leads to an impact of + 6.15% and -5.8% in the fair value of the restructuring funds.
(c) In the specific case of participation units valued in accordance with quotations provided by the respective management company, it is not reasonable to carry out an analysis of the impact of changes of the variables subjacent to the determination of
(c) In the specific case of participation units valued in accordance with quotations provided by the respective management company, it is not reasonable to carry out an analysis of the impact of changes of the variables subjacent to the determination of
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 103 -
- 103 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Balance as at 31 December 2019
191
74 093
1 142 664
700 744
1 954 871
1 837
1 837
Financial assets held for trading
Derivatives
Economic hedging
held for trading
derivatives
Financial assets
mandatorily at fair
value through
profit or loss
Financial assets at
fair value through
other
comprehensive
income
Investment
properties
Total assets
31.12.2020
(in thousands of Euros)
Financial liabilities
held for trading
Derivatives held for
trading
Total liabilities
-
-
-
-
-
-
-
-
( 80 489)
-
-
-
-
-
-
-
8 479
( 41 302)
( 1 583)
( 27 541)
-
-
-
37 179
5 125
( 22 913)
16 326
( 2 685)
-
-
-
11 966
-
-
-
-
( 67 581)
( 101 828)
49 304
25 570
( 41 302)
( 104 985)
16 326
( 30 226)
( 67 581)
( 456 919)
49 304
-
-
-
-
-
-
-
-
-
-
-
-
-
-
( 191)
6 396
( 371 486)
10 190
321
321
Acquisitions
Attainment of maturity
Settlements
Transfers in
Transfers out
Disposals
Changes in value
Other movements
Balance as at 31 December 2020
709 231
43 222
592 605
1 345 058
2 158
2 158
In fiscal years 2021 and 2020 there were no significant transfers of value between the different levels of the fair value hierarchy.
Potential gains and losses on financial instruments and investment property classified at level 3 of the fair value hierarchy are recorded
in profit or loss or revaluation reserves in accordance with the respective asset accounting policy. The amounts calculated at 31
December 2021 and 2020 were as follows:
Derivatives held for trading
Economic hedging derivatives
Financial assets mandatorily at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Investment properties
31.12.2021
31.12.2020
Recognised in
Recognised in the
reserves
income statement
Total
Recognised in
Recognised in the
reserves
income statement
Total
(in thousands of Euros)
-
-
-
9 122
-
9 122
144
( 24 117)
21 662
-
31 182
28 871
144
( 24 117)
21 662
9 122
31 182
37 993
-
-
-
10 905
-
23 605
( 68 722)
( 359 642)
-
( 104 310)
23 605
( 68 722)
( 359 642)
10 905
( 104 310)
10 905
( 509 390)
( 498 485)
The following table presents, for financial assets included in level 3 of the fair value hierarchy, the main
valuation methods used and the impact of changing the main variables used in their valuation, when
applicable:
The following table presents, for financial assets included in level 3 of the fair value hierarchy, the main valuation methods used and
the impact of changing the main variables used in their valuation, when applicable:
Assets classified under level 3
Valuation Model
Variable analysed
Financial assets mandatorily at fair value through
profit or loss
31.12.2021
Carrying
book value
586.5
Obligations of other issuers
Cash flow discount model
Specific Impairment
2.4
-50%
Shares
Other variable income securities
Financial assets at fair value through other
comprehensive income
Shares
Total
Management company adjusted
valuation
Others
Management company adjusted
valuation
Management company adjusted
valuation
(b)
(a)
(b)
(c)
Discounted cash flows
Others
Renewable Energy Tariff
(a)
290.3
287.5
2.8
293.8
236.5
57.3
43.2
43.2
16.2
27.0
629.7
(in millions of Euros)
Unfavorable scenario
Favorable scenario
Change
Impact
Change
Impact
( 2.4)
( 2.4)
+50%
-
-
-
-
-
-
( 2.9)
( 2.9)
( 2.9)
-
( 5.3)
4.8
4.8
-
-
-
-
-
-
0.1
0.1
0.1
-
4.9
(a) No sensitivity analysis was carried out for these categories as these include securities of an individually immaterial value.
(b) For the sensitivity analysis carried out on the valuation of the Restructuring Funds, taking into account the valuation methodologies applied and considering that real estate assets represent more than 95% of the underlying assets of the Funds, a
variation of + 10% was considered and -10% in the fair value of the main real estate assets of each Fund, which leads to an impact of + 6.15% and -5.8% in the fair value of the restructuring funds.
(c) In the specific case of participation units valued in accordance with quotations provided by the respective management company, it is not reasonable to carry out an analysis of the impact of changes of the variables subjacent to the determination of
the quotation by the entity
Assets classified under level 3
Valuation Model
Variable analysed
Carrying
book value
Unfavorable scenario
Favorable scenario
Change
Impact
Change
Impact
31.12.2020
(in millions of Euros)
Financial assets mandatorily at fair value through
profit or loss
Obligations of other issuers
Shares
Other variable income securities
Discounted cash flow model
Valuing adjusted management company
Specific Impairment
(b)
Valuing adjusted management company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Valuation of the management company
(b)
(c)
Financial assets at fair value through other
comprehensive income
Shares
Total
Discounted cash flow model
Other
Renewable energy Rates
(a)
-50%
709.2
77.9
273.6
357.7
225.3
132.5
43.2
43.2
16.2
27.0
752.5
( 22.2)
( 22.2)
-
-
-
-
( 2.9)
( 2.9)
( 2.9)
-
( 25.1)
+50%
- 103 -
12.2
12.2
-
-
-
-
0.1
0.1
0.1
-
12.3
(a) No sensitivity analysis was carried out for these categories as these include securities of an individually immaterial value.
(b) For the sensitivity analysis carried out on the valuation of the Restructuring Funds, taking into account the valuation methodologies applied and considering that real estate assets represent more than 95% of the underlying assets of the Funds, a
variation of + 10% was considered and -10% in the fair value of the main real estate assets of each Fund, which leads to an impact of + 6.15% and -5.8% in the fair value of the restructuring funds.
(c) In the specific case of participation units valued in accordance with quotations provided by the respective management company, it is not reasonable to carry out an analysis of the impact of changes of the variables subjacent to the determination of
the quotation by the entity
The main parameters used, at 31 December 2021 and 2020, in the valuation models were as follows:
Interest rate curves
The short-term rates presented reflect benchmark interest rates for the money market, whilst those presented for the long-term
represent the interest rate swap quotations for the respective periods:
270
31.12.2021
31.12.2020
EUR
USD
GBP
EUR
USD
GBP
Overnight
1 month
3 months
6 months
9 months
1 year
3 years
5 years
7 years
10 years
15 years
20 years
25 years
30 years
-0.5740
-0.5830
-0.5720
-0.5460
-0.5235
-0.5010
-0.1450
0.0160
0.1300
0.3030
0.4920
0.5480
0.5240
0.4790
0.0644
0.1013
0.2091
0.3388
0.4603
0.5831
1.1495
1.3460
1.4530
1.5610
1.6800
1.7708
1.7316
1.7160
0.2100
0.2400
0.3900
0.6100
0.6700
0.8246
1.2972
1.2910
1.2373
1.2095
1.1817
1.1518
1.1264
1.1030
-0.5780
-0.5540
-0.5450
-0.5260
-0.5125
-0.4990
-0.5080
-0.4575
-0.3845
-0.2650
-0.0720
0.0090
0.0090
-0.0250
0.0776
0.1439
0.2384
0.2576
0.2995
0.3419
0.2370
0.4275
0.6478
0.9170
1.1835
1.3033
1.3680
1.3998
(%)
0.1000
0.0900
0.0900
0.1450
0.1950
-0.0125
0.0913
0.1926
0.2799
0.3966
0.5200
0.5730
0.5805
0.5741
Credit Spreads
The credit spreads used by the Group in the valuation of credit derivatives are those disclosed on a daily basis by Markit, representing
observations pertaining to around 85 renowned international financial entities. The evolution of the main indexes, understood as being
representative of the credit spread behaviour in the market during the year, is presented as follows:
(basis points)
Index
Series
1 year
3 years
5 years
7 years
10 years
31 December 2021
CDX USD Main
iTraxx Eur Main
iTraxx Eur Senior Financial
31 December 2020
CDX USD Main
iTraxx Eur Main
iTraxx Eur Senior Financial
37
36
36
35
34
34
0.00
10.43
0.00
18.95
0.00
0.00
0.00
26.82
0.00
30.35
27.66
0.00
49.57
47.76
54.86
49.98
47.95
59.06
68.55
66.71
0.00
70.70
66.24
0.00
0.00
87.01
85.86
90.52
86.37
89.30
Interest rate volatility
The values presented below represent the implicit volatilities (at the money) used for the valuation of interest rate options :
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 105 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Valuation Model
Valuation Model
Variable analysed
Variable analysed
Carrying book
Carrying book
Unfavorable scenario
Unfavorable scenario
value
value
Change
Change
Impact
Impact
Favorable scenario
Favorable scenario
Change
Change
Impact
Impact
31.12.2020
31.12.2020
(in millions of Euros)
(in millions of Euros)
Discounted cash flow model
Discounted cash flow model
Valuing adjusted management company
Valuing adjusted management company
Specific Impairment
Specific Impairment
-50%
-50%
+50%
+50%
Valuing adjusted management company
Valuing adjusted management company
Valuation of the management company
Valuation of the management company
(b)
(b)
(b)
(b)
(c)
(c)
709,2
709,2
77,9
77,9
273,6
273,6
357,7
357,7
225,3
225,3
1 123,5
1 123,5
43,2
43,2
( 22,2)
( 22,2)
( 22,2)
( 22,2)
-
-
-
-
-
-
-
-
( 2,9)
( 2,9)
12,2
12,2
12,2
12,2
-
-
-
-
-
-
-
-
0,1
0,1
Assets classified under level 3
Assets classified under level 3
Financial assets mandatorily at fair value through
Financial assets mandatorily at fair value through
profit or loss
profit or loss
Obligations of other issuers
Obligations of other issuers
Shares
Shares
Other variable income securities
Other variable income securities
Financial assets at fair value through other
Financial assets at fair value through other
comprehensive income
comprehensive income
Shares
Shares
Discounted cash flow model
Discounted cash flow model
Other
Other
Renewable energy Rates
Renewable energy Rates
(a)
(a)
43,2
43,2
16,2
16,2
27,0
27,0
752,5
752,5
( 2,9)
( 2,9)
( 2,9)
( 2,9)
-
-
( 25,1)
( 25,1)
0,1
0,1
0,1
0,1
-
-
12,3
12,3
Total
Total
(a) No sensitivity analysis was carried out for these categories as these include securities of an individually immaterial value.
(a) No sensitivity analysis was carried out for these categories as these include securities of an individually immaterial value.
(b) For the sensitivity analysis carried out on the valuation of the Restructuring Funds, taking into account the valuation methodologies applied and considering that real estate assets represent more than 95% of the underlying assets of the Funds, a variation of
(b) For the sensitivity analysis carried out on the valuation of the Restructuring Funds, taking into account the valuation methodologies applied and considering that real estate assets represent more than 95% of the underlying assets of the Funds, a variation of
+ 10% was considered and -10% in the fair value of the main real estate assets of each Fund, which leads to an impact of + 6.15% and -5.8% in the fair value of the restructuring funds.
+ 10% was considered and -10% in the fair value of the main real estate assets of each Fund, which leads to an impact of + 6.15% and -5.8% in the fair value of the restructuring funds.
(c) In the specific case of participation units valued in accordance with quotations provided by the respective management company, it is not reasonable to carry out an analysis of the impact of changes of the variables subjacent to the determination of the
(c) In the specific case of participation units valued in accordance with quotations provided by the respective management company, it is not reasonable to carry out an analysis of the impact of changes of the variables subjacent to the determination of the
quotation by the entity
quotation by the entity
The main parameters used, at 31 December 2021 and 2020, in the valuation models were as follows:
The main parameters used, at 31 December 2021 and 2020, in the valuation models were as follows:
The main parameters used, at 31 December 2021 and 2020, in the valuation models were as follows:
Interest rate curves
The short-term rates presented reflect benchmark interest rates for the money market, whilst those
presented for the long-term represent the interest rate swap quotations for the respective periods:
Interest rate curves
Interest rate curves
The short-term rates presented reflect benchmark interest rates for the money market, whilst those presented for the long-term
The short-term rates presented reflect benchmark interest rates for the money market, whilst those presented for the long-term
represent the interest rate swap quotations for the respective periods:
represent the interest rate swap quotations for the respective periods:
31.12.2021
31.12.2021
USD
USD
0.0644
0.0644
0.1013
0.1013
0.2091
0.2091
0.3388
0.3388
0.4603
0.4603
0.5831
0.5831
1.1495
1.1495
1.3460
1.3460
1.4530
1.4530
1.5610
1.5610
1.6800
1.6800
1.7708
1.7708
1.7316
1.7316
1.7160
1.7160
EUR
EUR
-0.5740
-0.5740
-0.5830
-0.5830
-0.5720
-0.5720
-0.5460
-0.5460
-0.5235
-0.5235
-0.5010
-0.5010
-0.1450
-0.1450
0.0160
0.0160
0.1300
0.1300
0.3030
0.3030
0.4920
0.4920
0.5480
0.5480
0.5240
0.5240
0.4790
0.4790
GBP
GBP
0.2100
0.2100
0.2400
0.2400
0.3900
0.3900
0.6100
0.6100
0.6700
0.6700
0.8246
0.8246
1.2972
1.2972
1.2910
1.2910
1.2373
1.2373
1.2095
1.2095
1.1817
1.1817
1.1518
1.1518
1.1264
1.1264
1.1030
1.1030
31.12.2020
31.12.2020
USD
USD
0.0776
0.0776
0.1439
0.1439
0.2384
0.2384
0.2576
0.2576
0.2995
0.2995
0.3419
0.3419
0.2370
0.2370
0.4275
0.4275
0.6478
0.6478
0.9170
0.9170
1.1835
1.1835
1.3033
1.3033
1.3680
1.3680
1.3998
1.3998
EUR
EUR
-0.5780
-0.5780
-0.5540
-0.5540
-0.5450
-0.5450
-0.5260
-0.5260
-0.5125
-0.5125
-0.4990
-0.4990
-0.5080
-0.5080
-0.4575
-0.4575
-0.3845
-0.3845
-0.2650
-0.2650
-0.0720
-0.0720
0.0090
0.0090
0.0090
0.0090
-0.0250
-0.0250
Overnight
Overnight
1 month
1 month
3 months
3 months
6 months
6 months
9 months
9 months
1 year
1 year
3 years
3 years
5 years
5 years
7 years
7 years
10 years
10 years
15 years
15 years
20 years
20 years
25 years
25 years
30 years
30 years
(%)
(%)
GBP
GBP
0.1000
0.1000
0.0900
0.0900
0.0900
0.0900
0.1450
0.1450
0.1950
0.1950
-0.0125
-0.0125
0.0913
0.0913
0.1926
0.1926
0.2799
0.2799
0.3966
0.3966
0.5200
0.5200
0.5730
0.5730
0.5805
0.5805
0.5741
0.5741
Credit Spreads
The credit spreads used by the Group in the valuation of credit derivatives are those disclosed on a daily
basis by Markit, representing observations pertaining to around 85 renowned international financial
entities. The evolution of the main indexes, understood as being representative of the credit spread
behaviour in the market during the year, is presented as follows:
Credit Spreads
Credit Spreads
The credit spreads used by the Group in the valuation of credit derivatives are those disclosed on a daily basis by Markit, representing
The credit spreads used by the Group in the valuation of credit derivatives are those disclosed on a daily basis by Markit, representing
observations pertaining to around 85 renowned international financial entities. The evolution of the main indexes, understood as being
observations pertaining to around 85 renowned international financial entities. The evolution of the main indexes, understood as being
representative of the credit spread behaviour in the market during the year, is presented as follows:
representative of the credit spread behaviour in the market during the year, is presented as follows:
Index
Index
Series
Series
1 year
1 year
3 years
3 years
5 years
5 years
7 years
7 years
(basis points)
(basis points)
10 years
10 years
31 December 2021
31 December 2021
CDX USD Main
CDX USD Main
iTraxx Eur Main
iTraxx Eur Main
iTraxx Eur Senior Financial
iTraxx Eur Senior Financial
31 December 2020
31 December 2020
CDX USD Main
CDX USD Main
iTraxx Eur Main
iTraxx Eur Main
iTraxx Eur Senior Financial
iTraxx Eur Senior Financial
37
37
36
36
36
36
35
35
34
34
34
34
0.00
0.00
10.43
10.43
0.00
0.00
18.95
18.95
0.00
0.00
0.00
0.00
0.00
0.00
26.82
26.82
0.00
0.00
30.35
30.35
27.66
27.66
0.00
0.00
49.57
49.57
47.76
47.76
54.86
54.86
49.98
49.98
47.95
47.95
59.06
59.06
68.55
68.55
66.71
66.71
0.00
0.00
70.70
70.70
66.24
66.24
0.00
0.00
0.00
0.00
87.01
87.01
85.86
85.86
90.52
90.52
86.37
86.37
89.30
89.30
Interest rate volatility
Interest rate volatility
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 104 -
- 104 -
271
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Interest rate volatility
The values presented below represent the implicit volatilities (at the money) used for the valuation of
interest rate options:
The values presented below represent the implicit volatilities (at the money) used for the valuation of interest rate options:
The values presented below represent the implicit volatilities (at the money) used for the valuation of interest rate options:
The values presented below represent the implicit volatilities (at the money) used for the valuation of interest rate options:
31.12.2021
31.12.2020
EUR
USD
31.12.2021
GBP
EUR
31.12.2020
USD
1 year
3 years
1 year
5 years
7 years
3 years
1 year
5 years
3 years
7 years
10 years
5 years
10 years
15 years
7 years
15 years
10 years
15 years
EUR
23.16
55.79
EUR
23.16
65.81
55.79
23.16
68.34
65.81
55.79
68.34
68.98
65.81
68.98
66.28
68.34
66.28
68.98
66.28
USD
31.12.2021
73.74
59.15
USD
73.74
56.88
59.15
73.74
54.59
56.88
59.15
54.59
50.93
56.88
50.93
-
54.59
-
50.93
-
GBP
76.14
63.57
GBP
76.14
71.17
63.57
76.14
79.98
71.17
63.57
79.98
88.08
71.17
88.08
-
79.98
-
88.08
-
EUR
15.39
21.33
EUR
15.39
28.38
21.33
15.39
34.60
28.38
21.33
34.60
41.18
28.38
41.18
46.54
34.60
46.54
41.18
46.54
USD
31.12.2020
118.44
91.12
USD
118.44
84.06
91.12
118.44
65.41
84.06
91.12
65.41
62.77
84.06
62.77
-
65.41
-
62.77
-
(%)
(%)
GBP
(%)
GBP
-
-
GBP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Foreign exchange rates and volatility
Presented below, are the foreign exchange rates (European Central Bank) at the balance sheet date
and the implicit volatilities (at the money) for the main currencies used in the derivatives’ valuation:
Foreign exchange rates and volatility
Foreign exchange rates and volatility
Presented below, are the foreign exchange rates (European Central Bank) at the balance sheet date and the implicit volatilities (at
Presented below, are the foreign exchange rates (European Central Bank) at the balance sheet date and the implicit volatilities (at
the money) for the main currencies used in the derivatives’ valuation:
Foreign exchange rates and volatility
the money) for the main currencies used in the derivatives’ valuation:
Presented below, are the foreign exchange rates (European Central Bank) at the balance sheet date and the implicit volatilities (at
the money) for the main currencies used in the derivatives’ valuation:
Volatility (%)
31.12.2021
31.12.2021
31.12.2020
31.12.2020
Foreign
Foreign
exchange rate
exchange rate
Foreign
EUR/USD
1.1326
31.12.2021
1.1326
EUR/USD
exchange rate
0.8403
EUR/GBP
0.8403
EUR/GBP
EUR/USD
1.1326
1.0331
EUR/CHF
1.0331
EUR/CHF
EUR/GBP
0.8403
9.9888
EUR/NOK
9.9888
EUR/NOK
1.0331
EUR/CHF
4.5969
EUR/PLN
EUR/PLN
4.5969
9.9888
EUR/NOK
85.3004
EUR/RUB
85.3004
EUR/RUB
4.5969
EUR/PLN
USD/BRL a)
5.5713
USD/BRL a)
5.5713
85.3004
EUR/RUB
USD/TRY b)
13.4500
USD/TRY b)
USD/BRL a)
13.4500
5.5713
USD/TRY b)
a) Calculated based on EUR / USD and EUR / BRL exchange rates.
a) Calculated based on EUR / USD and EUR / BRL exchange rates.
13.4500
b) Calculated based on EUR / USD and EUR / TRY exchange rates.
b) Calculated based on EUR / USD and EUR / TRY exchange rates.
a) Calculated based on EUR / USD and EUR / BRL exchange rates.
b) Calculated based on EUR / USD and EUR / TRY exchange rates.
1.2271
31.12.2020
1.2271
0.8990
0.8990
1.2271
1.0802
1.0802
0.8990
10.4703
10.4703
1.0802
4.5597
4.5597
10.4703
91.4671
91.4671
4.5597
5.1940
5.1940
91.4671
7.4265
7.4265
5.1940
7.4265
1 month
1 month
3 months
3 months
5.15
1 month
5.15
5.13
5.13
5.15
4.33
4.33
5.13
9.01
9.01
4.33
5.43
5.43
9.01
7.51
7.51
5.43
15.91
15.91
7.51
77.79
77.79
15.91
77.79
5.38
3 months
5.38
5.63
5.63
5.38
4.63
4.63
5.63
9.18
9.18
4.63
5.60
5.60
9.18
8.07
8.07
5.60
16.24
16.24
8.07
60.35
60.35
16.24
60.35
Volatility (%)
6 months
6 months
Volatility (%)
9 months
9 months
1 year
1 year
5.55
6 months
5.55
6.05
6.05
5.55
4.90
4.90
6.05
9.20
9.20
4.90
5.79
5.79
9.20
8.71
8.71
5.79
16.59
16.59
8.71
49.71
49.71
16.59
5.57
9 months
5.57
6.25
6.25
5.57
4.98
4.98
6.25
9.18
9.18
4.98
5.85
5.85
9.18
9.29
9.29
5.85
17.19
17.19
9.29
45.58
45.58
17.19
5.58
6.39
4.95
9.18
5.83
9.58
1 year
5.58
6.39
5.58
4.95
6.39
9.18
4.95
5.83
9.18
9.58
5.83
17.79
9.58
41.29
17.79
17.79
41.29
49.71
45.58
41.29
Regarding foreign exchange rates, the Group uses in its valuation models the spot rate observed in the
market at the moment of the valuation.
Regarding foreign exchange rates, the Group uses in its valuation models the spot rate observed in the market at the moment of the
Regarding foreign exchange rates, the Group uses in its valuation models the spot rate observed in the market at the moment of the
valuation.
valuation.
Regarding foreign exchange rates, the Group uses in its valuation models the spot rate observed in the market at the moment of the
valuation.
Equity indexes
Equity indexes
The table below presents the evolution of the main market equity indexes and their respective volatilities, used in the valuation of
The table below presents the evolution of the main market equity indexes and their respective volatilities, used in the valuation of
Equity indexes
Equity indexes
equity derivatives:
equity derivatives:
The table below presents the evolution of the main market equity indexes and their respective volatilities, used in the valuation of
The table below presents the evolution of the main market equity indexes and their respective
equity derivatives:
volatilities, used in the valuation of equity derivatives:
Historical volatility
Historical volatility
Quotation
Quotation
DJ Euro Stoxx 50
DJ Euro Stoxx 50
PSI 20
DJ Euro Stoxx 50
PSI 20
IBEX 35
PSI 20
IBEX 35
FTSE 100
IBEX 35
FTSE 100
DAX
FTSE 100
DAX
S&P 500
DAX
S&P 500
BOVESPA
S&P 500
BOVESPA
BOVESPA
31.12.2021
31.12.2021
31.12.2021
Quotation
31.12.2020
31.12.2020
31.12.2020
% Change
% Change
% Change
4 298
4 298
5 569
4 298
5 569
8 714
5 569
8 714
7 385
8 714
7 385
15 885
7 385
15 885
4 766
15 885
4 766
104 822
4 766
104 822
104 822
3 553
3 553
4 898
3 553
4 898
8 074
4 898
8 074
6 461
8 074
6 461
13 719
6 461
13 719
3 756
13 719
3 756
119 017
3 756
119 017
119 017
20.99%
20.99%
13.70%
20.99%
13.70%
7.93%
13.70%
7.93%
14.30%
7.93%
14.30%
15.79%
14.30%
15.79%
26.89%
15.79%
26.89%
-11.93%
26.89%
-11.93%
-11.93%
Historical volatility
1 month
1 month
1 month
24.38
24.38
13.34
24.38
13.34
23.88
13.34
23.88
16.62
23.88
16.62
21.77
16.62
21.77
18.23
21.77
18.23
21.59
18.23
21.59
21.59
3 months
3 months
3 months
17.81
17.81
14.68
17.81
14.68
18.20
14.68
18.20
12.21
18.20
12.21
16.10
12.21
16.10
13.84
16.10
13.84
23.76
13.84
23.76
23.76
Implied
Volatility
Implied
Volatility
Implied
Volatility
-
-
-
-
-
-
-
-
11.96
-
11.96
13.76
11.96
13.76
12.53
13.76
12.53
24.48
12.53
24.48
24.48
272
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 105 -
- 105 -
- 105 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The fair value of financial assets and liabilities recorded in the balance sheet at amortised cost is
analysed as follows, having been estimated based on the main methodologies and assumptions
described below:
The fair value of financial assets and liabilities recorded in the balance sheet at amortised cost is analysed as follows, having been
estimated based on the main methodologies and assumptions described below:
Fair Value
(in thousands of Euros)
31 December 2021
Cash, cash balances at central bank and other demand deposits
Financial assets at amortised cost
Debt securities
Loans and advances to banks
Loans and advances to customers
Financial assets
Assets / liabilities
recorded at
amortised cost
Quoted market prices
Valuation models
based on observable
market parameters
Valuation models
based on
unobservable market
parameters
Total fair value
(Level 1)
(Level 2)
(Level 3)
5 871 538
2 338 697
50 466
23 650 739
-
5 871 538
-
5 871 538
1 076 479
-
-
327 192
50 466
-
1 146 334
-
24 028 198
2 550 005
50 466
24 028 198
31 911 440
1 076 479
6 249 196
25 174 532
32 500 207
Financial liabilities measured at amortised cost
Deposits from banks
Due to customers
Debt securities issued, subordinated debt and liabilities associated to transferred assets
Other financial liabilities
Financial liabilities
10 745 155
27 582 093
1 514 153
374 593
40 215 994
-
-
1 739 388
1 739 388
10 779 351
-
-
-
10 779 351
-
27 582 093
77 349
374 593
28 034 035
10 779 351
27 582 093
1 816 737
374 593
40 552 774
31 December 2020
Cash, cash balances at central bank and other demand deposits
Financial assets at amortised cost
Debt securities
Loans and advances to banks
Loans and advances to customers
Financial assets
Financial liabilities measured at amortised cost
Deposits from banks
Due to customers
Debt securities issued, subordinated debt and liabilities associated to transferred assets
Other financial liabilities
Financial liabilities
Fair Value
(in thousands of Euros)
Assets / liabilities
recorded at
amortised cost
Quoted market prices
Valuation models
based on observable
market parameters
Valuation models
based on
unobservable market
parameters
Total fair value
(Level 1)
(Level 2)
(Level 3)
2 695 459
2 229 947
113 795
23 554 304
28 593 505
10 102 896
26 322 060
1 017 928
365 883
37 808 767
-
2 695 459
-
2 695 459
846 176
-
-
846 176
-
-
1 146 753
1 146 753
378 588
113 795
-
1 203 883
-
23 784 698
2 428 647
113 795
23 784 698
3 187 842
24 988 581
29 022 599
10 143 505
-
1 800
-
10 145 305
-
26 322 060
82 898
365 883
26 770 841
10 143 505
26 322 060
1 231 451
365 883
38 062 899
Cash and deposits with Central Banks, Deposits with banks and Loans and advances to credit institutions and Deposits from Central
Banks.
Considering the short-term nature of these financial instruments, their carrying book value is a reasonable estimate of their fair value.
Cash and deposits with Central Banks, Deposits with banks and Loans and advances to
credit institutions and Deposits from Central Banks.
Considering the short-term nature of these financial instruments, their carrying book value is a
reasonable estimate of their fair value.
Securities at amortised cost
The fair value of securities recorded at fair value is estimated according to the methodologies used for the valuation of securities
recorded at fair value, as described at the beginning of the current Note.
Loans and advances to customers
The fair value of loans and advances to customers is estimated based on the discounted expected future
cash flows of principal and interest, assuming that the instalments are paid on the dates contractually
defined. The expected future cash flows from portfolios of loans with similar credit risk characteristics,
such as residential mortgage loans, are estimated collectively on a portfolio basis. The discount rates
used by the Group are the current interest rates used for loans with similar characteristics.
Securities at amortised cost
The fair value of securities recorded at fair value is estimated according to the methodologies used for
the valuation of securities recorded at fair value, as described at the beginning of the current Note.
Loans and advances to customers
The fair value of loans and advances to customers is estimated based on the discounted expected future cash flows of principal and
interest, assuming that the instalments are paid on the dates contractually defined. The expected future cash flows from portfolios of
loans with similar credit risk characteristics, such as residential mortgage loans, are estimated collectively on a portfolio basis. The
discount rates used by the Group are the current interest rates used for loans with similar characteristics.
Deposits from credit institutions
The fair value of deposits from Central Banks and Deposits from credit institutions is estimated based on the discounted expected
future cash flows of principal and interest.
273
Due to customers
The fair value of these financial instruments is estimated based on the discounted expected future cash flows of principal and interest.
The discount rate used by the Group is that which reflects the current interest rates applicable to deposits with similar characteristics
at the balance sheet date. Given that the interest rates applicable to these instruments are renewed for periods under one year, there
are no material relevant differences in their fair value.
Debt securities issued and Subordinated debt
The fair value of these instruments is based on quoted market prices, when available. When not available, the Group estimates their
fair value by discounting their expected future cash flows of principal and interest.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 106 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Deposits from credit institutions
The fair value of deposits from Central Banks and Deposits from credit institutions is estimated based
on the discounted expected future cash flows of principal and interest.
Due to customers
The fair value of these financial instruments is estimated based on the discounted expected future cash
flows of principal and interest. The discount rate used by the Group is that which reflects the current
interest rates applicable to deposits with similar characteristics at the balance sheet date. Given that
the interest rates applicable to these instruments are renewed for periods under one year, there are no
material relevant differences in their fair value.
Debt securities issued and Subordinated debt
The fair value of these instruments is based on quoted market prices, when available. When not
available, the Group estimates their fair value by discounting their expected future cash flows of
principal and interest.
Other financial liabilities
These liabilities are short-term and therefore the book value is a reasonable estimate of their fair value.
NOTE 43 – TRANSFER OF ASSETS
As part of the restructuring process of the Portuguese real estate sector, several initiatives were
launched to create financial, operational and management conditions to the sector. Accordingly, the
Government, in close liaison with the business and the financial sector, including BES, encouraged the
creation of companies and specialised funds which, through concentration, aggregation, mergers and
integrated management, could achieve the required synergies to recover the companies. Pursuing the
goals established, companies (parent companies) were incorporated, in which the Originating Bank
had minority interests and which, in turn, now hold almost all the share capital of certain subsidiaries
(subsidiaries of those parent companies) to acquire certain real estate bank loans.
Several assignments operations of financial assets (namely loans and advances to customers) were
made to the latter entities (subsidiaries of the parent companies). These entities are responsible for
managing the assets received as collateral and, after the assignment of the loans and advances to
customers, for implementing a plan to increase their value. Almost all the financial assets assigned under
these operations were derecognized from the balance sheet of the Group, since a substantial portion
of the risks and rewards associated with these, as well as the respective control, were transferred to
those third parties.
These acquiring entities have a specific management structure, fully autonomous from the assignor
Banks, appointed on the date of their incorporation and have the following main responsibilities:
• define the entity’s purpose;
• to administer and manage, exclusively and independently, the assets acquired, to define the
objectives and investment policy as well as the management and affairs of the entity.
The acquiring entities are predominantly financed through the issuance of senior equity instruments,
fully subscribed by the parent companies. The amount of capital represented by senior securities equals
the fair value of the underlying asset, determined through a negotiation process based on valuations
made by both parties. These securities are remunerated at an interest rate that reflects the risk of the
company holding the assets. Additionally, the funding can be supplemented through Bank underwriting
of junior capital instruments in an amount equal to the difference between the carrying book value
of the assets transferred and the fair value subjacent to the senior securities’ valuation. These junior
capital instruments, when subscribed by the Group, will give rise to a contingent positive amount, if the
value of the assets assigned exceeds the value of the senior securities plus their remuneration, and
are normally limited to a maximum of 25% of the aggregate amount of the senior and junior securities
issued.
Given that these junior securities reflect a differential assessment (gap) of the fair value of the assets
assigned, based on a valuation performed by independent entities and a negotiation process between
the parties, they are fully provided for in the Group’s balance sheet.
Therefore, following the asset assignment operations, the Group subscribed:
• equity instruments, representing the capital of parent companies in which the cash flow that will
enable the company to be recovered come from a wide range of assets provided by the various
Banks. These securities are recognized in the assets portfolio mandatorily at fair value through profit
or loss being valued to market, with valuation released regularly by the mentioned companies whose
accounts are audited at the end of each year;
•
junior instruments issued by the loan acquiring companies, which are fully provided for to reflect the
best estimate of the impairment of the financial assets transferred
The instruments subscribed by novobanco Group represent clear minority positions in the share capital
of the parent companies and of its subsidiaries.
In this context, holding no control but being exposed to some of the risks and rewards of ownership,
the novobanco Group, in accordance with IFRS 9 3.2.7, performed an analysis of its exposure to the
variability of the risks and rewards of the transferred assets before and after the operation, having
concluded that it has not substantially retained all the risks and rewards of ownership. Additionally,
and considering that it has no control either, it proceeded, in accordance with IFRS 9 3.2.6c (i) with
the derecognition of the assets transferred and (ii) the recognition of the assets received in return, as
shown in the following table:
274
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Up to 31 December 2012
Fundo Recuperação Turismo, FCR
FLIT SICAV
Discovery Portugal Real Estate Fund
Fundo Vallis Construction Sector
Fundo Recuperação, FCR
Up to 31 December 2013
Fundo Vallis Construction Sector
FLIT SICAV
Discovery Portugal Real Estate Fund
Fundo Recuperação Turismo, FCR
Fundo Recuperação, FCR
Fundo Reestruturação Empresarial
Up to 31 December 2014
Discovery Portugal Real Estate Fund
Fundo Vallis Construction Sector
Fundo Recuperação, FCR
Fundo Reestruturação Empresarial
Fundo Aquarius
FLIT SICAV
Up to 31 December 2015
Fundo Aquarius
Fundo Recuperação, FCR
Discovery Portugal Real Estate Fund
Up to 31 December 2016
Fundo Aquarius
Fundo Vallis Construction Sector
Up to 31 December 2017
Fundo Aquarius
FLIT SICAV
Up to 31 December 2018
Fundo Aquarius
FLIT SICAV
Fundo Vallis Construction Sector
Up to 31 December 2019
Fundo Aquarius
Up to 31 December 2020
Fundo Aquarius
Up to 31 December 2021
Fundo Aquarius
Amounts at transfer date
(in thousands of Euros)
Amounts of the assets transferred
Securities subscribed
Net assets
transferred
Transfer amount
Result of the
transfer
Shares
(Senior
securities)
Junior
securities
Total
Impairment
Carrying book
value
282 121
252 866
96 196
66 272
145 564
18 552
80 769
51 809
11 066
52 983
67 836
282 121
254 547
93 208
66 272
149 883
18 552
80 135
45 387
11 066
52 963
67 836
73 802
74 240
-
-
5 389
108 517
-
24 883
1 471
5 348
710
14 156
555
3 261
839
-
-
376
-
-
5 389
108 481
-
24 753
1 471
5 774
602
14 156
470
3 298
644
-
-
332
-
1 682
(2 988)
-
4 319
-
( 634)
(6 422)
-
( 20)
-
438
-
-
-
( 36)
-
( 130)
-
427
( 108)
-
( 86)
37
( 194)
-
-
256 892
235 318
96 733
81 002
148 787
1 606
85 360
51 955
-
726
99 403
58 238
1 289
14 565
4 078
104 339
1 500
30 406
-
4 855
600
14 453
624
-
644
3 348
( 1)
( 44)
507
1 947
1 488
( 458)
1 313
6 628
6 625
( 3)
7 000
34 906
23 247
-
21 992
36 182
2 874
-
-
-
-
-
-
314
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
291 798
( 34 906)
258 565
( 23 247)
96 733
102 994
184 970
4 480
85 360
51 955
-
726
99 403
58 238
1 603
14 565
4 078
104 339
1 500
30 406
-
4 855
600
14 453
624
-
644
3 348
( 1)
507
1 313
7 000
-
(21 992)
(23 000)
(2 874)
-
-
-
-
-
-
( 314)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
256 892
235 318
96 733
81 002
161 970
1 606
85 360
51 955
-
726
99 403
58 238
1 289
14 565
4 078
104 339
1 500
30 406
-
4 855
600
14 453
624
-
644
3 348
( 1)
507
1 313
7 000
1 373 917
1 369 695
( 4 222)
1 305 541
119 516
1 425 057
( 106 333)
1 318 724
As at 31 December 2021, the Group’s total exposure to securities associated with the assignment
operations amounted to Euro 524.1 thousand (31 December 2020: Euro 498.8 million). With the
adoption of IFRS 9, these securities were transferred from the fair value portfolio through other
comprehensive income to the mandatorily measured at fair value through profit or loss, therefore, the
balance sheet value presented below already corresponds to the respective fair value, not requiring
register an impairment. The detail is as follows:
As at 31 December 2021, the Group's total exposure to securities associated with the assignment operations amounted to Euro 524.1
thousand (31 December 2020: Euro 498.8 million). With the adoption of IFRS 9, these securities were transferred from the fair value
portfolio through other comprehensive income to the mandatorily measured at fair value through profit or loss , therefore, the balance
sheet value presented below already corresponds to the respective fair value, not requiring register an impairment. The detail is as
follows:
Securities
31.12.2021
Shareholder loans or
supplementary capital
Participation
units subscribed
(no.)
Book value
Gross
amount
Impairment
Net
amount
Fundo Recuperação Turismo, FCR
FLIT SICAV
Discovery Portugal Real Estate Fund
Fundo Recuperação, FCR
Fundo Reestruturação Empresarial
Fundo Aquarius
261 656
282 793
259 527
206 805
80 719
167 602
87 288
34 824
( 34 824)
158 486
129 037
46 960
29 886
72 401
14 900
-
-
( 14 900)
-
-
-
-
-
-
(in thousands of Euros)
Securities
31.12.2020
Shareholder loans or
supplementary capital
Participation units
subscribed (no.)
Book value
Gross
amount
Impairment
Net
amount
260 683
86 316
34 824
( 34 824)
281 191
258 440
206 805
117 051
160 586
157 084
116 479
44 873
22 436
71 631
14 900
-
-
( 14 900)
-
-
-
-
-
-
Unrealised
Subscribed
Capital
-
-
-
-
-
-
-
13 769
13 826
5 232
18 543
6 113
19 519
77 002
Unrealised
Subscribed
Capital
-
-
-
-
-
-
-
12 796
12 423
3 950
18 034
5 680
21 073
73 956
1 259 102
524 058
49 724
( 49 724)
1 284 756
498 819
49 724
( 49 724)
275
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 109 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Amounts at transfer date
(in thousands of Euros)
Amounts of the assets transferred
Securities subscribed
Net assets
transferred
Transfer amount
Result of the
transfer
Shares
(Senior
securities)
Junior
securities
Total
Impairment
Carrying book
value
34 906
23 247
291 798
( 34 906)
258 565
( 23 247)
21 992
36 182
2 874
(21 992)
(23 000)
(2 874)
73 802
74 240
438
314
( 314)
5 389
108 517
5 389
108 481
282 121
252 866
96 196
66 272
145 564
18 552
80 769
51 809
11 066
52 983
67 836
-
-
-
24 883
1 471
5 348
710
14 156
555
3 261
839
-
-
376
282 121
254 547
93 208
66 272
149 883
18 552
80 135
45 387
11 066
52 963
67 836
-
-
-
24 753
1 471
5 774
602
14 156
470
3 298
644
-
-
332
1 682
(2 988)
4 319
( 634)
(6 422)
( 20)
( 36)
( 130)
427
( 108)
( 86)
37
( 194)
-
-
-
-
-
-
-
-
-
-
-
-
-
256 892
235 318
96 733
81 002
148 787
1 606
85 360
51 955
-
726
99 403
58 238
1 289
14 565
4 078
104 339
1 500
30 406
-
4 855
600
14 453
624
-
644
3 348
( 1)
( 44)
507
1 947
1 488
( 458)
1 313
6 628
6 625
( 3)
7 000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
96 733
102 994
184 970
4 480
85 360
51 955
-
726
99 403
58 238
1 603
14 565
4 078
104 339
1 500
30 406
-
4 855
600
14 453
624
-
644
3 348
( 1)
507
1 313
7 000
256 892
235 318
96 733
81 002
161 970
1 606
85 360
51 955
-
726
99 403
58 238
1 289
14 565
4 078
104 339
1 500
30 406
-
4 855
600
14 453
624
-
644
3 348
( 1)
507
1 313
7 000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Up to 31 December 2012
Fundo Recuperação Turismo, FCR
FLIT SICAV
Discovery Portugal Real Estate Fund
Fundo Vallis Construction Sector
Fundo Recuperação, FCR
Up to 31 December 2013
Fundo Vallis Construction Sector
FLIT SICAV
Discovery Portugal Real Estate Fund
Fundo Recuperação Turismo, FCR
Fundo Recuperação, FCR
Fundo Reestruturação Empresarial
Up to 31 December 2014
Discovery Portugal Real Estate Fund
Fundo Vallis Construction Sector
Fundo Recuperação, FCR
Fundo Reestruturação Empresarial
Fundo Aquarius
FLIT SICAV
Up to 31 December 2015
Fundo Aquarius
Fundo Recuperação, FCR
Discovery Portugal Real Estate Fund
Up to 31 December 2016
Fundo Aquarius
Fundo Vallis Construction Sector
Up to 31 December 2017
Fundo Vallis Construction Sector
Up to 31 December 2018
Fundo Aquarius
FLIT SICAV
Fundo Aquarius
FLIT SICAV
Up to 31 December 2019
Fundo Aquarius
Up to 31 December 2020
Fundo Aquarius
Up to 31 December 2021
Fundo Aquarius
1 373 917
1 369 695
( 4 222)
1 305 541
119 516
1 425 057
( 106 333)
1 318 724
As at 31 December 2021, the Group's total exposure to securities associated with the assignment operations amounted to Euro 524.1
thousand (31 December 2020: Euro 498.8 million). With the adoption of IFRS 9, these securities were transferred from the fair value
portfolio through other comprehensive income to the mandatorily measured at fair value through profit or loss, therefore, the balance
sheet value presented below already corresponds to the respective fair value, not requiring register an impairment. The detail is as
follows:
Securities
31.12.2021
Shareholder loans or
supplementary capital
Participation
units subscribed
(no.)
Book value
Gross
amount
Impairment
Net
amount
261 656
282 793
259 527
206 805
80 719
167 602
87 288
34 824
( 34 824)
158 486
129 037
46 960
29 886
72 401
14 900
-
-
( 14 900)
-
-
-
-
-
-
1 259 102
524 058
49 724
( 49 724)
Unrealised
Subscribed
Capital
-
-
-
-
-
-
-
12 796
12 423
3 950
18 034
5 680
21 073
73 956
Securities
31.12.2020
Shareholder loans or
supplementary capital
Participation units
subscribed (no.)
Book value
Gross
amount
Impairment
Net
amount
260 683
86 316
34 824
( 34 824)
281 191
258 440
206 805
117 051
160 586
157 084
116 479
44 873
22 436
71 631
14 900
-
-
( 14 900)
-
-
-
-
-
-
1 284 756
498 819
49 724
( 49 724)
Unrealised
Subscribed
Capital
-
-
-
-
-
-
-
13 769
13 826
5 232
18 543
6 113
19 519
77 002
(in thousands of Euros)
Fundo Recuperação Turismo, FCR
FLIT SICAV
Discovery Portugal Real Estate Fund
Fundo Recuperação, FCR
Fundo Reestruturação Empresarial
Fundo Aquarius
The Group also maintains an indirect exposure to the financial assets assigned, within the scope of a
minority interest in the pool of all assets assigned by other financial institutions, through the shares of
the subscribed parent companies. However, there was an operation with the company FLITPTREL VIII
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
in which, due to the fact that the acquiring company substantially holds assets assigned by the Group
and considering the holding of junior securities, the variability test resulted in a substantial exposure
to all risks and benefits. In this circumstance, the operation, in the initial amount of Euro 60 million, re-
mained recognized in the balance sheet under the heading of loans to customers.
NOTE 44 – RISK MANAGEMENT
novobanco, S.A., (www.novobanco.pt) “institutional” area in the website presents the information di-
rected to investors which complements the available information presented in this document, namely,
novobanco, S.A., Market Discipline Report 2020 which addresses the public disclosure obligations as
defined in Part VIII of the Regulation n.º 575/2013 of the European Parliament and the Council at 26 of
July, 2013 (CRR) and EBA guidelines transposed to the Portuguese legislation through the Instruction
n.º 5/2018 the Bank of Portugal.
•
Integrality of the risk culture, through a holistic vision and anticipation of its materialization;
• 3 Lines of defense model, with the objective of detecting, measuring, monitoring and controlling in
an adequate manner the materially relevant risks to which the Novobanco Group is subject to. This
model implies that all employees, in their sphere of action, are responsible for risk management and
control.
- 108 -
44.2 Governance and risk management structure
Risk Management, vital to the development of the novobanco Group’s activity, is centralized in the
Risk Management Function, comprising the Global Risk Department (Departamento de Risco Global
(DRG)) and the Rating Department (Departamento de Rating (DRT)), which holistically defines the
principles of risk management and control, in close coordination with the other second line units of
novobanco Group, as well as with the Internal Audit Department.
All materially relevant risks are reported to the respective Management and Supervisory Bodies
(EBD, GSB and both Risk Committees and specialized Committees), which assume responsibility
for supervising, monitoring, assessing and defining the Risk Appetite and the control principles
implemented.
In the case where the information of the present annual report supports the information in the Market
Discipline report it is identified through references to this report as systematized in the Annex VI of the
Market Discipline Report.
Operationally, DRG centralizes the Risk Management Function of novobanco Group, namely the
responsibilities inherent to the function, supervising the various materially relevant financial institutions
of the Group, ensuring independence from the business areas.
44.1 - Framework
Risk is implicit in the banking business and as such novobanco Group is naturally exposed to several
categories of risks arising from external and internal factors, and which arise according to the
characteristics of the markets in which the Bank operates and the activities it undertakes.
Thus, the novobanco Group’s risk management and control is based on the following premises:
novobanco Group Head of the Risk Management Function is the head of the DRG. In order to ensure
greater efficiency in liaison with the DRG, a local Risk Officer has been appointed in each relevant entity
of the novobanco Group. The DRG intervention is direct or of coordination in articulation with the units
that assume the local Risk Management Function.
The risks identified as relevant and material are quantified as part of the Internal Capital Adequacy
Self-Assessment (ICAAP) exercise, the most relevant of which are:
•
Independence vis-à-vis the other units of the Group, in particular the risk-taking units;
• Universality by application in the whole novobanco Group;
• Credit risk;
• Market risk;
276
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
• Liquidity risk;
• Operational risk.
The Risk Management Function also continuously monitors and assesses ESG (Environmental, Social
and Governance) Risks in close coordination with the Sustainability area, which contributes specific
knowledge to the understanding of climate and environmental risk factors and social risk factors. ESG
factors, refer to climate and environmental, social or governance issues that may have a positive or
negative impact on the financial performance or solvency of an entity, institution or person.
The following are the main risk management guidelines for the risks identified above:
• credit risk: the management and control of this type of risk is supported by the use of an internal
system of risk identification, assessment and quantification, as well as internal processes for
attributing ratings and scorings to portfolios and their continuous monitoring in specific decision
forums;
• market risk: existence of a specialized team that centralizes the management and control of market
risk and balance sheet interest rate risk (IRRBB) of the Group, in line with the regulations and good
risk practices;
•
liquidity risk: based on the measurement of liquidity outflows from contractual and contingent
positions in normal or stressed situations, the management and control of this risk consists, on the
one hand, in determining the size of the pool of liquidity available at each moment, and on the other
hand, in planning for medium and long term stable financing sources;
• operational risk: operational risk policies are defined by a specialized DRG team, with other units
such as the Compliance department and the Information security office issuing specific risk policies.
The effectiveness of the methodologies for the identification and control of operational risk is
guaranteed through the actions of the operational risk management representatives appointed for
each organic unit, who promote the risk culture in the first line of defense in continuous collaboration
with the DRG.
44.3 Credit Risk
Credit risk results from the possibility of financial losses arising from the default of the client or coun-
terparty in relation to the contractual obligations established with the Group within the scope of its
credit activity. Credit risk is essentially present in traditional banking products - loans, guarantees and
other contingent liabilities and derivatives. In credit default swaps (CDS), the net exposure between
protection seller and buyer positions on each entity underlying the transactions, constitutes credit risk
for novobanco Group. CDS are recorded at their fair value in accordance with the accounting policy
described in Note 7.10.6.
A permanent management of the credit portfolios is carried out, which favors interaction between the
various teams involved in risk management throughout the successive stages of the life of the cred-
it process. This approach is complemented by the introduction of continuous improvements both in
terms of methodologies and tools for risk assessment and control, as well as in terms of procedures
and decision circuits.
The monitoring of the Group’s credit risk profile, namely the evolution of credit exposures and monitor-
ing of credit losses, is carried out regularly by the Risk Committee. The compliance with approved credit
limits and the correct functioning of the mechanisms associated with the approval of credit lines within
the scope of the current activity of the commercial areas are also subject to regular analysis.
Main events in 2021
The most relevant events during 2021 and with an impact on credit risk management policies and
procedures management policies and procedures consisted in the incorporation of specific adjustments
to ensure an adequate level of impairments on the universe of customers who ended the moratorium in
the second half of 2021.
In view of the COVID pandemic and the extension of its impact through 2021, it became imperative to
ensure that the level of provisioning level would remain adequate in a post-COVID context. The level
of uncertainty remains high regarding the economic recovery as well as the duration of the effects of
the pandemic on the sectors of economic activity most affected by the pandemic. This uncertainty
became even more pressing on the universe that benefited from moratoria, namely on the ability to
fully resume and maintain compliance with their credit obligations after the end of these moratoria.
For this purpose, several quantitative and qualitative criteria were identified in addition to those
observed in the segmentation and segmentation and staging rules in force in the impairment model
and applied them to the universe of exposures that benefited from moratoria until the second half of
2021. By verifying these criteria, these exposures could see their original stage worsened and/or their
originally calculated and/or the risk notation itself considered for the purpose of calculating impairment.
Therefore, novobanco defined a set of 8 additional criteria for the universe of exposures that benefited
from the moratorium, on which it considered, for purposes of calculating impairment at December 2021,
a stage and/or a level of risk rating aggravated risk.
These criteria and the consequent adjustment are systematized in the table below:
277
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
credit risk: the management and control of this type of risk is supported by the use of an internal system of risk identification,
assessment and quantification, as well as internal processes for attributing ratings and scorings to portfolios and their
continuous monitoring in specific decision forums;
market risk: existence of a specialized team that centralizes the management and control of market risk and balance sheet
interest rate risk (IRRBB) of the Group, in line with the regulations and good risk practices;
liquidity risk: based on the measurement of liquidity outflows from contractual and contingent positions in normal or stressed
situations, the management and control of this risk consists, on the one hand, in determining the size of the pool of liquidi ty
available at each moment, and on the other hand, in planning for medium and long term stable financing sources;
operational risk: operational risk policies are defined by a specialized DRG team, with other units such as the Compliance
department and the Information security office issuing specific risk policies. The effectiveness of the methodologies f or the
identification and control of operational risk is guaranteed through the actions of the operational risk management
representatives appointed for each organic unit, who promote the risk culture in the first line of defense in continuous
collaboration with the DRG.
44.3 Credit Risk
Credit risk results from the possibility of financial losses arising from the default of the client or counterparty in relati on to the
contractual obligations established with the Group within the scope of its credit activity. Credit risk is essentially present in traditional
banking products - loans, guarantees and other contingent liabilities and derivatives. In credit default swaps (CDS), the net exposure
between protection seller and buyer positions on each entity underlying the transactions, constitutes credit risk for novobanco Group.
CDS are recorded at their fair value in accordance with the accounting policy described in Note 7.10.6.
A permanent management of the credit portfolios is carried out, which favors interaction between the various teams involved in risk
management throughout the successive stages of the life of the credit process. This approach is complemented by the introduct ion
of continuous improvements both in terms of methodologies and tools for risk assessment and control, as well as in terms of
procedures and decision circuits.
The monitoring of the Group's credit risk profile, namely the evolution of credit exposures and monitoring of credit losses, is carried
out regularly by the Risk Committee. The compliance with approved credit limits and the correct functioning of the mechanisms
associated with the approval of credit lines within the scope of the current activity of the commercial areas are also subjec t to regular
analysis.
Main events in 2021
The most relevant events during 2021 and with an impact on credit risk management policies and procedures management policies
and procedures consisted in the incorporation of specific adjustments to ensure an adequate level of impairments on the uni verse of
customers who ended the moratorium in the second half of 2021.
In view of the COVID pandemic and the extension of its impact through 2021, it became imperative to ensure that the level of
provisioning level would remain adequate in a post-COVID context. The level of uncertainty remains high regarding the economic
recovery as well as the duration of the effects of the pandemic on the sectors of economic activity most affected by the pandemic .
This uncertainty became even more pressing on the universe that benefited from moratoria, namely on the ability to fully resume and
maintain compliance with their credit obligations after the end of these moratoria.
For this purpose, several quantitative and qualitative criteria were identified in addition to those observed in the segmenta tion and
segmentation and staging rules in force in the impairment model and applied them to the universe of exposures that benefited from
moratoria until the second half of 2021. By verifying these criteria, these exposures could see their original stage worsened and/or
their originally calculated and/or the risk notation itself considered for the purpose of calculating impairment.
Therefore, novobanco defined a set of 8 additional criteria for the universe of exposures that benefited from the moratorium, on
which it considered, for purposes of calculating impairment at December 2021, a stage and/or a level of risk rating aggravate d risk.
These criteria and the consequent adjustment are systematized in the table below:
Nº
1
2
3
4
5
6
7
8
Criteria
Debtors with credit more than 45 days overdue
Individuals with signs of Unlikely to Pay
Small companies with signs of Unlikely to Pay
Non-rated companies
Debtors with restructured credit due to financial difficulties
Individuals with signs of significant deterioration of credit risk
Debtors with a current rating at the threshold of significant deterioration of credit risk Stage 2 Classification
Risk rating downgrade
Small businesses with proposed downgrade of rating
Stage 3 Classification
Stage 3 Classification
Stage 3 Classification
Stage 2 rating and assigned the worst risk rating
Risk rating downgrade
Stage 2 classification and risk rating downgrade
Adjustment
The first three adjustments aimed to capture situations of debtors that, having benefited from a prolonged period of moratorium and
consequent increase in liquidity, presented defaults after this period and/or reduced financial capacity to resume their obligations.
The first three adjustments aimed to capture situations of debtors that, having benefited from a
prolonged period of moratorium and consequent increase in liquidity, presented defaults after this
period and/or reduced financial capacity to resume their obligations.
The adjustments systematized above were incorporated into the collective impairment calculation as
The remaining adjustments reflect situations of debtors who, also having benefited from a prolonged period of moratorium and
consequent increase in liquidity, present less serious signs than the first three groups. Not being situations of default, they are
post-model adjustments and simultaneously with the update of the calculation support scenarios,
- 111 -
situations of debtors who show signs of difficulty in fully complying with their responsibilities. their responsibilities. As it is not possible
with the corresponding update of the forward-looking risk.
to translate these difficulties into the Customer's final rating, the adjustment applied for purposes of calculating impairment is to
worsen the stage to 2 and/or consider an aggravated risk notation than the current one.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The adjustments systematized above were incorporated into the collective impairment calculation as post-model adjustments and
simultaneously with the update of the calculation support scenarios, with the corresponding update of the forward -looking risk.
The exclusive impact of these adjustments was an increase in impairments of Euro16 million. This impact
was partially mitigated by the update of the macroeconomic scenarios that support the collective
impairment calculation through the forward-looking parameters.
The remaining adjustments reflect situations of debtors who, also having benefited from a prolonged
period of moratorium and consequent increase in liquidity, present less serious signs than the first three
groups. Not being situations of default, they are situations of debtors who show signs of difficulty
in fully complying with their responsibilities. their responsibilities. As it is not possible to translate
these difficulties into the Customer’s final rating, the adjustment applied for purposes of calculating
impairment is to worsen the stage to 2 and/or consider an aggravated risk notation than the current
one.
The exclusive impact of these adjustments was an increase in impairments of Euro16 million. This impact was partially mitigated by
the update of the macroeconomic scenarios that support the collective impairment calculation through the forward -looking
parameters.
This update occurred in 2021 and the macroeconomic scenarios were taken into account as described
in Note 44 - Activity Risk Management.
This update occurred in 2021 and the macroeconomic scenarios were taken into account as described in Note 44 - Activity Risk
Management.
42.3.1 Credit Risk Exposure
novobanco Group’s maximum credit risk exposure is analyzed as follows:
44.3.1 Credit Risk Exposure
novobanco Group’s maximum credit risk exposure is analysed as follows:
Deposits with and loans and advances to banks
Derivatives for trading and fair value option derivatives
Securities held for trading
Securities at fair value through profit/loss - mandatory
Securities at fair value through other comprehensive income
Securities at amortised cost
Loans and advances to customers
Derivatives - hedge accounting
Other assets
Guarantees and standby letters provided
Documentary credits
Irrevocable commitments
Credit risk associated with the credit derivatives' reference entities
31.12.2021
(in thousands of Euros)
31.12.2020
Gross Value
Impairment
Net Value
Gross Value
Impairment
Net Value
506 789
263 199
114 465
54 960
7 160 616
2 582 558
24 932 453
19 639
923 866
2 234 243
402 332
5 845 257
-
( 1 113)
-
-
-
( 3 716)
( 246 997)
(1 247 917)
-
( 182 499)
( 79 599)
-
( 12 737)
-
505 676
263 199
114 465
54 960
7 156 900
2 335 561
23 684 536
19 639
741 367
2 154 644
402 332
5 832 520
-
617 390
388 257
267 016
160 184
7 842 835
2 432 313
25 216 809
12 972
960 708
2 826 190
410 292
7 020 935
4 798
( 250 138)
-
-
-
( 3 690)
( 201 237)
(1 599 775)
-
( 202 456)
( 92 163)
-
( 9 823)
-
367 252
388 257
267 016
160 184
7 839 145
2 231 076
23 617 034
12 972
758 252
2 734 027
410 292
7 011 112
4 798
45 040 377
(1 774 578)
43 265 799
48 160 699
(2 359 282)
45 801 417
For financial assets in the balance sheet, the maximum exposure to credit risk is represented by the accounting book value, net of
impairment. For the off-balance sheet elements, the maximum exposure of the guarantees is the maximum amount that the Group
would have to pay if the guarantees were executed. For loan commitments and other credit-related commitments of an irrevocable
nature, the maximum exposure is the total amount of the commitments assumed.
The Group calculates impairment, on a collective or individual basis in accordance with the accounting policy as described in Note
7.16. In the cases where the value of the collateral, net of haircuts (taking into account the type of collateral), equals or exceeds the
exposure, the individual impairment may be nil. Hence, novobanco Group does not have any overdue financial assets for which it
has not performed a review regarding their recoverability and the subsequent impairment recognition, when necessary.
44.3.2 Impairment Models scenarios
The exercise of build the base and alternative macroeconomic scenarios for the Portuguese economy is based on a combination of
econometric forecasts, information on forecasts from other external institutions and application of subjective expert judgmen t.
In the first component, GDP growth is estimated through estimates for the growth of expenditure components, obtaining GDP through
the formula GDP = Consumption + Investment + Exports - Imports. The econometric specifications chosen are those that, after testing
different alternatives, generate the best result.
The econometric estimates thus obtained are then weighted with forecasts from external institutions, according to the princip le that
the combination of different projections tends to be more accurate than just a forecast (the risk of errors and bias associated with
specific methods and variables is minimized).
The forecasts for prices (consume and real estate) and unemployment follow a similar methodology: own forecasts based on an
estimated model, weighted with forecasts from external institutions, if available. In a base scenario, the projections for interest rates
start from market expectations (provided by Bloomberg), with possible adjustments in accordance with the principles defined a bove,
if considered appropriate (weighting by expert judgment and forecasts from external institutions). The alternative scenarios are based
on the historical observation of deviations from the trend in GDP behavior (cost and contraction cycles), the reference of EB A
recommendations for extreme adverse scenarios, the stylized facts of economic cycles, with respect to the components of
expenditure, prices, unemployment, etc. and estimates.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 112 -
278
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
For financial assets in the balance sheet, the maximum exposure to credit risk is represented by the
accounting book value, net of impairment. For the off-balance sheet elements, the maximum exposure
of the guarantees is the maximum amount that the Group would have to pay if the guarantees were
executed. For loan commitments and other credit-related commitments of an irrevocable nature, the
maximum exposure is the total amount of the commitments assumed.
The Group calculates impairment, on a collective or individual basis in accordance with the accounting
policy as described in Note 7.16. In the cases where the value of the collateral, net of haircuts (taking
into account the type of collateral), equals or exceeds the exposure, the individual impairment may be
nil. Hence, novobanco Group does not have any overdue financial assets for which it has not performed
a review regarding their recoverability and the subsequent impairment recognition, when necessary.
44.3.2 Impairment Models scenarios
The exercise of build the base and alternative macroeconomic scenarios for the Portuguese economy
is based on a combination of econometric forecasts, information on forecasts from other external
institutions and application of subjective expert judgment.
In the first component, GDP growth is estimated through estimates for the growth of expenditure
components, obtaining GDP through the formula GDP = Consumption + Investment + Exports - Imports.
The econometric specifications chosen are those that, after testing different alternatives, generate
the best result.
The econometric estimates thus obtained are then weighted with forecasts from external institutions,
according to the principle that the combination of different projections tends to be more accurate than
just a forecast (the risk of errors and bias associated with specific methods and variables is minimized).
The forecasts for prices (consume and real estate) and unemployment follow a similar methodology:
own forecasts based on an estimated model, weighted with forecasts from external institutions, if
available. In a base scenario, the projections for interest rates start from market expectations (provided
by Bloomberg), with possible adjustments in accordance with the principles defined above, if considered
appropriate (weighting by expert judgment and forecasts from external institutions). The alternative
scenarios are based on the historical observation of deviations from the trend in GDP behavior (cost and
contraction cycles), the reference of EBA recommendations for extreme adverse scenarios, the stylized
facts of economic cycles, with respect to the components of expenditure, prices, unemployment, etc.
and estimates.
Thus, when revising / updating the scenarios, the respective probabilities of execution are also reviewed.
Once the scenarios are updated, the values of the risk parameters are updated for later consideration in
the scope of the Impairment calculation. The final impairment calculated will thus result from the sum
of the impairment value of each scenario, weighted by the respective probability of execution.
Currently, 3 scenarios are considered for the calculation of impairment on a collective basis: base case,
downside case (or adverse) and more favourable case. The scenarios considered and the respective
evolution of the main macroeconomic variables are described in the tables below:
A - Base Scenario, with a relative weight of 60%.
A - Base Scenario, with a relative weight of 60%
GDP
Private Consumption
Government Expenditure
Investment
Exports
Imports
Domestic Demand
GDP
Private Consumption
Government Expenditure
Investment
Exports
Imports
Domestic Demand
Net External Demand
Prices
Unit
Real growth %
Real growth %
Real growth %
Real growth %
Real growth %
Real growth %
Real growth %
2019
2.7
3.0
2.1
3.2
4.1
4.9
3.1
2020
-8.4
-5.5
0.4
-5.7
-18.6
-12.1
-5.6
2021
4.5
2022
5.3
2023
2.4
2024
2.2
4.5
4.3
5.3
9.3
9.5
4.6
4.6
1.8
8.2
10.1
8.5
4.8
2.3
0.3
5.6
4.9
5.1
2.6
2.1
0.3
4.9
4.5
4.7
2.3
EUR mn (real)
203 854
186 645
194 971
205 317
210 330
214 962
EUR mn (real)
132 018
122 677
128 197
134 095
137 179
140 059
EUR mn (real)
EUR mn (real)
EUR mn (real)
EUR mn (real)
33 772
36 795
88 102
86 751
33 918
34 680
71 683
76 229
35 376
36 518
78 350
83 471
36 013
39 513
86 263
90 566
36 121
41 725
90 490
95 185
36 230
43 770
94 562
99 658
EUR mn (real)
202 585
191 275
200 092
209 620
215 025
220 059
EUR mn (real)
1 351
-4 546
-5 121
-4 303
-4 695
-5 097
CPI
Real Estate (Residential)
Real Estate (Commercial)
Equity prices (incremental change)
%
%
%
%
0.3
9.6
1.9
10.2
6.6
0.0
8.4
1.7
-6.1
7.0
1.2
6.6
1.5
15.0
6.9
1.9
3.7
2.3
0.0
6.6
1.6
2.5
1.6
0.0
6.4
1.7
2.0
1.4
0.0
6.3
EUR mn (nominal)
147 925
146 873
154 364
160 692
165 192
169 322
EUR mn (nominal)
10 663
18 820
17 131
14 420
13 012
11 149
Unemployment
Households Disposable Income
Households Savings
Households Savings Rate
Household Investment (GFCF)
Non Fin Corporations Gross Disposable Income (Savings)
Non Financial Corporations Investment
% labour force
% Disp Income
EUR mn (nominal)
EUR mn (nominal)
EUR mn (nominal)
Capital Transfers - net acquisition/disposal of assets (non-financial & non-produced)
EUR mn (nominal)
Non Financial Corporations Financing Capacity
EUR mn (nominal)
7.2
8 472
19 452
26 905
352
-7 101
12.8
8 224
16 062
24 142
2 398
-5 682
11.1
8 553
20 302
26 508
2 800
-3 406
9.0
8 904
21 541
28 337
4 900
-1 896
7.9
9 171
22 381
29 612
4 900
-2 331
6.6
9 372
23 209
30 500
4 100
-3 191
-10.3
9.8
6.9
4.5
3.0
Euribor (annual average)
Sovereign Yields (average)
10Y PGB-Bund spread
10Y-2Y PGB Spread
Unit
2019
2020
2021
2022
2023
2024
3-month
end-of-period
6-month
end-of-period
12-month
end-of-period
Bund 10Y
end-of-period
PGB 10Y
end-of-period
PGB 2Y
end-of-period
Annual Average
end-of-period
Annual Average
end-of-period
%
%
%
%
%
%
%
%
%
%
%
%
bps
bps
bps
bps
-0.36
-0.38
-0.30
-0.32
-0.22
-0.25
-0.21
-0.19
0.77
0.44
-0.42
-0.55
98
63
119
99
-0.43
-0.55
-0.37
-0.53
-0.31
-0.50
-0.47
-0.57
0.42
0.03
-0.42
-0.73
89
60
84
76
-0.54
-0.50
-0.51
-0.48
-0.45
-0.42
-0.23
-0.10
0.30
0.52
-0.57
-0.51
53
62
87
103
-0.43
-0.35
-0.41
-0.33
-0.37
-0.31
-0.03
0.05
0.71
0.90
-0.31
-0.10
74
85
102
100
-0.17
0.01
-0.15
0.03
-0.13
0.05
0.11
0.17
1.01
1.12
0.00
0.10
90
95
101
102
0.05
0.09
0.07
0.11
0.09
0.13
0.21
0.24
1.16
1.19
0.13
0.15
95
95
103
104
279
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes The baseline macroeconomic scenario translates into a projection of the Gross Domestic Product to
fully recover in 2022 the level it had in 2019, continuing with moderate growth in 2023 and 2024. Re-
garding reference rates, the EURIBOR would remain with negative values in 2022, although projecting
with signs of returning to positive values at the end of 2023, a fact that would benefit the results of the
financial sector - if low values of cost of risk persist.
B - Less favourable / adverse scenario, with a relative weight of 30%
B - Less favourable / adverse scenario, with a relative weight of 30%
GDP
Private Consumption
Government Expenditure
Investment
Exports
Imports
Domestic Demand
GDP
Private Consumption
Government Expenditure
Investment
Exports
Imports
Domestic Demand
Net External Demand
Prices
Unit
Real growth %
Real growth %
Real growth %
Real growth %
Real growth %
Real growth %
Real growth %
2019
2.7
3.0
2.1
3.2
4.1
4.9
3.1
2020
-8.4
-5.5
0.4
-5.7
-18.6
-12.1
-5.6
2021
4.5
4.5
4.3
5.3
9.3
9.5
4.6
2022
-4.0
-4.4
0.8
-3.7
-14.3
-12.1
-3.4
2023
-1.6
2024
0.5
-1.9
0.6
-0.6
-8.8
-7.2
-1.2
1.0
0.3
1.6
4.5
5.4
1.0
EUR mn (real)
203 854
186 645
194 971
187 158
184 206
185 154
EUR mn (real)
132 018
122 677
128 197
122 557
120 228
121 430
EUR mn (real)
EUR mn (real)
EUR mn (real)
EUR mn (real)
33 772
36 795
88 102
86 751
33 918
34 680
71 683
76 229
35 376
36 518
78 350
83 471
35 659
35 167
67 146
73 371
35 873
34 956
61 237
68 088
35 981
35 515
63 992
71 765
EUR mn (real)
202 585
191 275
200 092
193 383
191 058
192 927
EUR mn (real)
1 351
-4 546
-5 121
-6 225
-6 851
-7 772
CPI
Real Estate (Residential)
Real Estate (Commercial)
Equity prices (incremental change)
%
%
%
%
0.3
9.6
1.9
10.2
0.0
8.4
1.7
-6.1
1.4
6.6
1.5
15.0
1.6
-11.5
-13.0
-50.0
-0.4
-8.5
-9.6
-0.1
-4.3
-4.9
-45.0
-35.0
Unemployment
Households Disposable Income
Households Savings
Households Savings Rate
Household Investment (GFCF)
Non Fin Corporations Gross Disposable Income (Savings)
Non Financial Corporations Investment
Capital Transfers - net acquisition/disposal of assets (non-financial & non-produced)
Non Financial Corporations Financing Capacity
% Disp Income
EUR mn (nominal)
EUR mn (nominal)
EUR mn (nominal)
EUR mn (nominal)
EUR mn (nominal)
% GDP
Unit
Euribor (annual average)
Sovereign Yields (average)
10Y PGB-Bund spread
10Y-2Y PGB Spread
3-month
end-of-period
6-month
end-of-period
12-month
end-of-period
Bund 10Y
PGB 10Y
PGB 2Y
Annual Average
Annual Average
%
%
%
%
%
%
%
%
%
bps
bps
% labour force
6.6
7.0
6.9
10.3
11.6
11.9
EUR mn (nominal)
147 925
146 873
154 364
150 813
149 607
150 953
EUR mn (nominal)
10 663
18 820
16 860
17 257
19 112
19 285
7.2
8 472
19 452
26 905
352
-7 101
-3.3
2019
-0.36
-0.38
-0.30
-0.32
-0.22
-0.25
-0.21
0.77
-0.42
98
119
12.8
8 224
16 062
24 142
2 398
-5 682
-2.8
2020
-0.43
-0.55
-0.37
-0.53
-0.31
-0.50
-0.47
0.42
-0.42
89
84
10.9
8 553
20 302
26 508
2 800
-3 406
-1.6
2021
-0.54
-0.50
-0.51
-0.48
-0.45
-0.42
-0.23
0.30
-0.57
53
87
11.4
8 065
19 531
24 228
2 400
-2 297
-1.1
2022
-0.55
-0.60
-0.53
-0.58
-0.49
-0.55
-0.43
0.94
0.02
12.8
7 832
19 257
23 308
2 200
-1 850
-0.9
2023
-0.60
-0.60
-0.58
-0.58
-0.55
-0.55
-0.73
1.35
0.53
12.8
7 879
19 546
23 680
2 200
-1 934
-0.9
2024
-0.58
-0.55
-0.55
-0.52
-0.53
-0.50
-0.70
1.33
0.50
136
208
203
92
83
83
280
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes The less favourable - or adverse - macroeconomic scenario considers that the effects of the COVID
pandemic will still be felt in 2022, leading to a recession that translates into a 4% drop in Gross Domes-
tic Product in 2022, registering tenuous growth in this variable only in 2024. Regarding reference rates,
C - Most favourable scenario, with a relative weight of 10%
C - Most favourable scenario, with a relative weight of 10%
the EURIBOR would remain with negative values in all years of the projection.
GDP
Private Consumption
Government Expenditure
Investment
Exports
Imports
Domestic Demand
GDP
Private Consumption
Government Expenditure
Investment
Exports
Imports
Domestic Demand
Net External Demand
Prices
Unit
Real growth %
Real growth %
Real growth %
Real growth %
Real growth %
Real growth %
Real growth %
2019
2.7
3.0
2.1
3.2
4.1
4.9
3.1
2020
-8.4
-5.5
0.4
-5.7
-18.6
-12.1
-5.6
2021
4.7
2022
6.7
2023
3.9
2024
3.2
5.1
4.6
4.9
9.5
10.1
5.0
6.3
0.5
14.3
20.4
19.6
6.7
3.5
0.4
9.2
21.1
20.6
4.1
2.8
0.4
7.1
13.2
12.8
3.3
EUR mn (real)
203 854
186 645
195 356
208 421
216 449
223 399
EUR mn (real)
132 018
122 677
128 934
137 056
141 853
145 825
EUR mn (real)
EUR mn (real)
EUR mn (real)
EUR mn (real)
33 772
36 795
88 102
86 751
33 918
34 680
71 683
76 229
35 478
36 379
78 493
83 928
35 656
41 582
94 505
35 798
45 407
35 941
48 631
114 446
129 553
100 378
121 056
136 551
EUR mn (real)
202 585
191 275
200 791
214 294
223 059
230 398
EUR mn (real)
1 351
-4 546
-5 435
-5 873
-6 610
-6 998
CPI
Real Estate (Residential)
Real Estate (Commercial)
Equity prices (incremental change)
%
%
%
%
0.3
9.6
1.9
10.2
0.0
8.4
1.7
-6.1
7.0
1.3
8.3
1.5
13.7
1.4
4.9
1.8
15.0
1.7
4.0
1.6
1.9
3.6
1.4
20.0
25.0
6.6
5.7
5.5
5.3
% labour force
6.6
EUR mn (nominal)
147 925
146 873
154 364
163 625
170 170
175 616
EUR mn (nominal)
10 663
18 820
16 343
14 563
13 268
11 094
Unemployment
Households Disposable Income
Households Savings
Households Savings Rate
Household Investment (GFCF)
Non Fin Corporations Gross Disposable Income (Savings)
Non Financial Corporations Investment
% Disp Income
EUR mn (nominal)
EUR mn (nominal)
EUR mn (nominal)
Capital Transfers - net acquisition/disposal of assets (non-financial & non-produced)
EUR mn (nominal)
Non Financial Corporations Financing Capacity
Euribor (annual average)
EUR mn (nominal)
% GDP
Unit
Sovereign Yields (average)
10Y PGB-Bund spread
10Y-2Y PGB Spread
3-month
end-of-period
6-month
end-of-period
12-month
end-of-period
Bund 10Y
end-of-period
PGB 10Y
end-of-period
PGB 2Y
end-of-period
Annual Average
end-of-period
Annual Average
end-of-period
%
%
%
%
%
%
%
%
%
%
%
%
bps
bps
bps
bps
7.2
8 472
19 452
26 905
352
-7 101
-3.3
2019
-0.36
-0.38
-0.30
-0.32
-0.22
-0.25
-0.21
-0.19
0.77
0.44
-0.42
-0.55
98
63
119
99
12.8
8 224
16 062
24 142
2 398
-5 682
-2.8
2020
-0.43
-0.55
-0.37
-0.53
-0.31
-0.50
-0.47
-0.57
0.42
0.03
-0.42
-0.73
89
60
84
76
10.6
8 553
20 302
26 508
2 800
-3 406
-1.6
2021
-0.55
-0.57
-0.52
-0.55
-0.49
-0.50
-0.31
-0.18
0.29
0.47
-0.65
-0.66
60
65
94
113
8.9
8 981
21 987
28 894
2 900
-4 006
-1.7
2022
-0.36
-0.15
-0.34
-0.13
-0.25
0.00
0.09
0.35
0.74
1.00
-0.31
0.05
65
65
104
95
7.8
9 385
23 571
30 772
2 900
-4 301
-1.8
2023
6.3
9 751
24 820
32 495
2 800
-4 875
-1.9
2024
0.10
0.35
0.12
0.37
0.21
0.42
0.58
0.80
1.18
1.35
0.21
0.37
60
55
97
98
0.64
0.93
0.67
0.96
0.74
1.05
1.09
1.38
1.57
1.78
0.56
0.74
48
40
101
104
281
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes The most favourable macroeconomic scenario is similar to the baseline scenario, differing in general by
considering that the recovery of the economy will be at higher levels. In this scenario the Gross Do-
mestic Product projection for 2022 would reach 6.7% and have a growth above 3% in 2023 and 2024.
Regarding reference rates, the EURIBOR would remain at negative values in 2022, also returning to
positive values at the end of 2023.
44.3.3 Impairment Models
As at 31 December 2021 and 2020, the detail of the amount of gross credit exposure and impairment assessed individually and
collectively, by segment was as follows:
44.3.3 Impairment Models
As at 31 December 2021 and 2020, the detail of the amount of gross credit exposure and impairment
assessed individually and collectively, by segment was as follows:
Corporate
Mortgage loans
Individual Assessment (1)
Exposure
Impairment
31.12.2021
Collective Assessment (2)
Exposure
Impairment
Total
Exposure
Impairment
1 329 469
643 005
12 384 556
369 675
13 714 025
1 012 680
3 138
155
9 808 875
55 865
9 812 013
56 020
(in thousands of Euros)
Consumer and other loans
148 390
132 298
1 258 025
46 919
1 406 415
179 217
Total
1 480 997
775 458
23 451 456
472 459
24 932 453
1 247 917
(1) Loans and advances for which the final impairment was determined and approved by the Impairment Committee
(2) Loans and advances for which the final impairment was determined according to the calculation rules of the collective impairment model
Corporate
Mortgage loans
Individual Assessment (1)
Exposure
Impairment
31.12.2020
Collective Assessment (2)
Exposure
Impairment
Total
Exposure
Impairment
1 667 521
951 926
12 205 537
393 094
13 873 058
1 345 020
4 551
220
10 005 902
65 625
10 010 453
65 845
(in thousands of Euros)
Consumer and other loans
155 734
136 305
1 177 564
52 605
1 333 298
188 910
Total
1 827 806
1 088 451
23 389 003
511 324
25 216 809
1 599 775
(1) Loans and advances for which the final impairment was determined and approved by the Impairment Committee
(2) Loans and advances for which the final impairment was determined according to the calculation rules of the collective impairment model
In the case of credits analysed by the Impairment Committee for which the impairment determined automatically by the Impairment
Model has not been changed, they are included and presented in the "Collective assessment".
In the case of credits analyzed by the Impairment Committee for which the impairment determined
automatically by the Impairment Model has not been changed, they are included and presented in the
“Collective assessment”.
As at 31 December 2021 and 2020, the analysis of the gross loans and advances to customers’ exposure and impairment assessed
individually and collectively, by geography, is presented as follows:
As at 31 December 2021 and 2020, the analysis of the gross loans and advances to customers’ exposure
and impairment assessed individually and collectively, by geography, is presented as follows:
31.12.2021
(in thousands of Euros)
Portugal
Spain
United Kingdom
France
Switzerland
Luxembourg
Other
Total
Individual Assessment*
Collective Assessment**
Total
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
1 300 717
58 906
-
-
-
-
121 374
683 754
8 008
-
-
-
-
83 696
20 969 733
566 121
269 010
309 486
240 456
264 525
832 125
425 794
13 495
3 417
11 831
1 825
2 552
13 545
22 270 450
625 027
269 010
309 486
240 456
264 525
953 499
1 109 548
21 503
3 417
11 831
1 825
2 552
97 241
1 480 997
775 458
23 451 456
472 459
24 932 453
1 247 917
* Loans and advances which the final impairment was determined and approved by the Impairment Committee
** Loans and advances for which the final impairment was determined according to the calculation rules of the collective impairment model
282
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 116 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
44.3.3 Impairment Models
collectively, by segment was as follows:
As at 31 December 2021 and 2020, the detail of the amount of gross credit exposure and impairment assessed individually and
31.12.2021
(in thousands of Euros)
Individual Assessment (1)
Collective Assessment (2)
Total
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
1 329 469
643 005
12 384 556
369 675
13 714 025
1 012 680
3 138
155
9 808 875
55 865
9 812 013
56 020
Consumer and other loans
148 390
132 298
1 258 025
46 919
1 406 415
179 217
1 480 997
775 458
23 451 456
472 459
24 932 453
1 247 917
(1) Loans and advances for which the final impairment was determined and approved by the Impairment Committee
(2) Loans and advances for which the final impairment was determined according to the calculation rules of the collective impairment model
31.12.2020
(in thousands of Euros)
Individual Assessment (1)
Collective Assessment (2)
Total
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
1 667 521
951 926
12 205 537
393 094
13 873 058
1 345 020
4 551
220
10 005 902
65 625
10 010 453
65 845
Consumer and other loans
155 734
136 305
1 177 564
52 605
1 333 298
188 910
1 827 806
1 088 451
23 389 003
511 324
25 216 809
1 599 775
(1) Loans and advances for which the final impairment was determined and approved by the Impairment Committee
(2) Loans and advances for which the final impairment was determined according to the calculation rules of the collective impairment model
In the case of credits analysed by the Impairment Committee for which the impairment determined automatically by the Impairment
Model has not been changed, they are included and presented in the "Collective assessment".
As at 31 December 2021 and 2020, the analysis of the gross loans and advances to customers’ exposure and impairment assessed
individually and collectively, by geography, is presented as follows:
Corporate
Mortgage loans
Total
Corporate
Mortgage loans
Total
Portugal
Spain
United Kingdom
France
Switzerland
Luxembourg
Other
Total
31.12.2021
(in thousands of Euros)
Individual Assessment*
Collective Assessment**
Total
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
1 300 717
58 906
-
-
-
-
121 374
683 754
8 008
-
-
-
-
83 696
20 969 733
566 121
269 010
309 486
240 456
264 525
832 125
425 794
13 495
3 417
11 831
1 825
2 552
13 545
22 270 450
625 027
269 010
309 486
240 456
264 525
953 499
1 109 548
21 503
3 417
11 831
1 825
2 552
97 241
1 480 997
775 458
23 451 456
472 459
24 932 453
1 247 917
* Loans and advances which the final impairment was determined and approved by the Impairment Committee
** Loans and advances for which the final impairment was determined according to the calculation rules of the collective impairment model
Portugal
Spain
United Kingdom
France
Switzerland
Luxembourg
Other
Total
31.12.2020
(in thousands of Euros)
Individual Assessment*
Collective Assessment**
Total
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
1 621 724
29 762
-
-
-
-
176 320
938 644
17 762
-
-
-
-
132 045
21 294 043
410 771
272 723
256 544
231 385
167 956
755 581
471 246
13 019
6 682
3 351
1 573
20
13 415
22 915 767
440 533
272 723
256 544
231 385
167 956
931 901
1 409 890
30 781
6 682
3 351
1 573
2 038
145 460
1 827 806
1 088 451
23 389 003
509 306
25 216 809
1 599 775
* Loans and advances which the final impairment was determined and approved by the Impairment Committee
44.3.3.1 Individual Credit Analysis
** Loans and advances for which the final impairment was determined according to the calculation rules of the collective impairment model
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
44.3.3.1 Individual Credit Analysis
The Individual Credit Analysis comprises a staging analysis and an individual impairment quantification analysis. The staging analysis
is performed for debtors previously classified as stage 1 and stage 2, with the purpose of evaluating the adequacy of the ass igned
The Individual Credit Analysis comprises a staging analysis and an individual impairment quantification
stage with additional information obtained on an individual basis. The individual impairment quantification analysis aims to determine
the most appropriate impairment rate for each credit customer, regardless of the amount resulting from the Collective Impairm ent
analysis. The staging analysis is performed for debtors previously classified as stage 1 and stage 2, with
Model. Clients that have been subject to Individual Analysis, but for which an objective impairment loss was not considered, are again
the purpose of evaluating the adequacy of the assigned stage with additional information obtained
included in the Collective Impairment Model. The Individual Analysis of the selected clients is carried out based on the info rmation
on an individual basis. The individual impairment quantification analysis aims to determine the most
provided by the Commercial Structures regarding the client / Group's framework, historical and forecast cash flows (when available)
appropriate impairment rate for each credit customer, regardless of the amount resulting from the
and existing collateral.
Collective Impairment Model. Clients that have been subject to Individual Analysis, but for which an
objective impairment loss was not considered, are again included in the Collective Impairment Model.
The Individual Analysis of the selected clients is carried out based on the information provided by the
Commercial Structures regarding the client / Group’s framework, historical and forecast cash flows
(when available) and existing collateral.
- 116 -
The scheme below is illustrative of the individual credit analysis to be carried out for the purpose of concluding on the classification
in terms of staging of debtors.
The scheme below is illustrative of the individual credit analysis to be carried out for the purpose of
concluding on the classification in terms of staging of debtors.
283
Selection Criteria
borrowers who:
Individual Analysis (staging analysis and, when applicable, quantification of individual impairment) should be carried out fo r the
Register Stage 3 exposure equal to or greater than Euro 1,000,000;
Register Stage 2 exposure equal to or greater than Euro 5,000,000;
Register Stage 2 exposure equal to or greater than Euro 1,000,000 and have no rating assigned;
Register Stage 1 exposure equal to or greater than Euro 5,000,000 and have no rating assigned;
Register Stage 1 exposure equal or greater than Euro 25,000,000 (individually significant exposure);
Fit into the risk segment Financial Holding and liability equal to or greater than 5 million euros;
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 117 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Individual Analysis
Yes
No
The debt holder is classified in
Stage 1 or Stage 2?
Staging Analysis
Individual analysis of credit classified in stage 1 and stage 2 with the
purpose of assessing the adequacy of the stage from the model taking
into account qualitative information available, the results of the analysis
of staging questionnares and specific information on the debtor’s ability
to generate enough cash flow to service debt service
Are the expected future cash flows for the debtor
materialy impacted and insufficient to cover the
debt service?
Yes
No
Collective Impairment
Quantification of individual
impairment (Stage 3)
Credit analysis to quantify impairment on an individual
basis using one of the following methodologies (or
combination of both): (i) going concern and (ii) gone
concern
Selection Criteria
• Are identified by the Committee itself based on another criteria that justify (e.g.; sector of activity);
Individual Analysis (staging analysis and, when applicable, quantification of individual impairment)
should be carried out for the borrowers who:
•
•
In the past, specific impairment has been attributed to them;
In the face of any new element that may have an impact on the calculation of impairment, be
proposed for analysis by one of the stakeholders of the Impairment Committee or by another Body.
• Register Stage 3 exposure equal to or greater than Euro 1,000,000;
• Register Stage 2 exposure equal to or greater than Euro 5,000,000;
• Register Stage 2 exposure equal to or greater than Euro 1,000,000 and have no rating assigned;
• Register Stage 1 exposure equal to or greater than Euro 5,000,000 and have no rating assigned;
The identification of the target customers for Individual Analysis will be updated monthly, in order
to contemplate any changes that may occur throughout the year. The Committee analysis of the
customers identified in the previous paragraph will be carried out in the month in which:
• Register Stage 1 exposure equal or greater than Euro 25,000,000 (individually significant exposure);
• The client registers, for the first time, one of the selection criteria for Individual Impairment Analysis,
• Fit into the risk segment Financial Holding and liability equal to or greater than 5 million euros;
• Fit into the Financial Holding risk segment and register exposure equal to or greater than Euro
5,000,000;
• Fit into the Real Estate risk segment and register exposure equal to or greater than Euro 5,000,000;
mentioned in the previous paragraph;
• Expiry of the Analysis expiration date;
•
Its analysis is requested by one of the participants of the Impairment Committee or by another Body.
284
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes The Individual Impairment Analysis can be carried out for individual customers, but should whenever
possible consider the Economic Group view of the selected customers.
Rules of Operation
The Individual Analysis of the selected clients is carried out based on the information provided by the
Commercial Units regarding the client / Group’s framework, historical and forecast cash flows (when
available) and existing collateral. For the analysis of the impairment quantification on an individual
basis, a scenario is established that is expected to recover credit: through the continuity of the
client’s business or through the execution of the collateral. If this analysis results in no impairment
being necessary, the impairment will be determined by collective analysis, that is, by the collective
impairment model (except for cases with objective evidence of loss / Default, in which the final rate will
have to be defined).
The Individual Impairment quantification analysis determines, for each period, the best recovery
scenario, aligning the commercial strategies defined for the client, with the different recovery
possibilities. When, due to lack of information, it is not possible to identify or update the recovery
scenario, the previous rate is maintained, and a new date is set for the client’s review.
44.3.3.2 Collective Model
In line with the principles set out in accounting standard IFRS9, an entity should use information
about past events, current conditions and forecasts of future economic conditions in estimating
risk parameters. The historical information should accurately capture current conditions and, when
measuring expected credit losses, the maximum period to be considered should be the maximum
contractual period. For these reasons, the risk parameters associated with the measurement of
losses under the IFRS9 accounting standard are often referred to as point-in-time (PIT) parameters.
In particular, regarding the estimation of the PD risk parameter, in line with the requirements of the
IRFS9 standard, namely with the provisions of paragraph [B5.5.43], the probability of default (PD) was
estimated in a 12-month time horizon, but also in a long perspective, capturing the remaining life cycle,
PD Lifetime.
Considering the requirement of measuring losses in a maximum time horizon, it becomes necessary to
estimate the PD parameter for different time horizons, greater or equal to 12 months, thus obtaining
the so-called “PD term structures”, which intends to reflect the PD associated with each contract,
containing a certain set of characteristics, for each reference date. The PD lifetime estimated, refers to
the conditional marginal probability used in the ECL calculation, representing the probability of default
of the next cash flow, while the PD structure is the cumulative probability of default, being used to
estimate the PD over a defined time interval, for example, PD term structure 5 years is equivalent to the
probability of default over 5 years. In the review exercise carried out, a time horizon was considered for
estimating the term structure of the DP from January 2015 to December 2019 (5 years). Since 2020 and
2021 are years where the PD would be underestimated due to the moratorium concessions, the values
of PD 2020 and 2021 were estimated according to the application of the forward-looking methodology
- described below - based on the results effectively verified in the relevant macroeconomic variables.
In line with the framework for developing the PD risk parameter under IFRS9, the primary approach for
obtaining the so-called term structure of PDs is based on the estimation of Hazard curves. The hazard
function h (t) also called hazard (failure) rate or mortality force represents the instantaneous death
rate of an individual in the time interval t to t+1, knowing that he or she survived until time t. The use of
this methodology is justified by the need to include, in the estimation process, survival effects as well
as the presence of the maturity effect. This approach was used to estimate the PD parameter for each
client (corporate High Default Portfolio) or for each contract (individual portfolio), as a function of the
underlying rating/score class.
For low default portfolios, typically without statistical significance in the number of observed defaults
that allow the use of statistical methods (such as hazard curves), an alternative approach was used.
This approach consists in extrapolating the PD determined and used for capital purposes (IRB),
assuming a constant marginal probability but applying an adjustment for ratings below or equal to
“b+”, as a consequence of the difference between the PD Through the Cycle and the observed Default
Rates of the last 5 years, in these ratings versus the others. Additionally, in short term portfolios, with
contractual maturities lower than 12 months, the approach followed in the estimation of the PD risk
parameter, consisted in calculating the observed annual average default rate and extrapolating it in
order to build the PD term structure and the PD lifetime.
Just as important as forecasting Default, is the perception of the loss associated with the contract
given a Default event. The loss given default is defined as the maximum loss incurred on an exposure in
relation to the amount at risk on the date of default.
The magnitude of the loss will depend on the time of Default, thus the following typologies of
parameters are segregated:
1. LGD non-Default - estimated loss parameter applicable to contracts that are not yet in Default;
2. LGD in-Default or Expected Recovery Rate - estimated loss parameter applicable to contracts that
are in Default and which depends on the best estimate for the expected loss;
For the purpose of determining the LGD parameter (non-default and TRE), a specific framework was
developed and approved that consists of the following methodological steps:
• Determination of the RDS (Reference data Set): in this step, the contracts/clients, with entry into
default in line with the new definition (nDoD- historical recovery) from January 2010 to July 2019
were selected.
• Determination of the realized (or observed) LGD: for each class and each of the defined termination
states, determine the associated loss amount.
• Estimated LGD determination: for clients/contracts with open positions (incomplete cases),
estimate by the defined workout the amount still recoverable (based on historical loss/recovery).
For corporate portfolios, the estimation of incomplete cases was done using the chain-ladder
method (client view), while for individual portfolios the probabilities/severities method was used
(contract view).
• Determination of the ERR: based on the estimated curve (0->workout) determine the expected
marginal recovery at each point in time.
285
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes •
In order to update the LGD and TRE parameters, the following input parameters were also updated:
Haircut relative to collateral; Update rate for each portfolio; Cost model, including direct and indirect
costs; Update of the workout period and its adaptation to the current and future strategy of the
collections process, for each estimation segment.
The incorporation of forward looking information was done through macroeconomic models, which
estimate the evolution of risk parameters through the evolution of macroeconomic variables. Four
PD models were developed: Large and Medium-Sized Enterprises, Small Enterprises and Start-ups,
Home Loans and Other Consumer Credit, and three LGD models: Home Loans, Consumer Credit and
Corporate Credit.
These models are based, on the one hand, on the historical default series and, on the other hand, on the
historical series of the main macroeconomic variables (GDP, inflation, interest rate, unemployment rate
and house prices). Historical quarterly data since 2010 were used.
Regarding the projection models of PD and LGD housing segment, the first step consisted in the
multivariate analysis of the explanatory variables, for this purpose the following variables were used:
GDP, unemployment rate, inflation rate, residential real estate market price growth and inflation rate.
On the other hand, the historical default series were transformed using the logit function in order to
ensure that the projections have values between 0 and 1, even in extremely adverse scenarios.
Next, linear regression modeling was carried out considering 3 explanatory variables, with the objective
of determining the regression that best explains the evolution of the risk parameter.
The choice of the final model depends on the economic sense and its statistical performance. To
determine the statistical performance of the models, the following indicators were taken into account:
• R2: which indicates what part of the evolution of the risk parameter is explained by the explanatory
variables, that is, the explanatory power of the model;
• P-value of the explanatory variables: which indicates whether the explanatory variable in question
is significant in explaining the evolution of the risk parameter;
• Variance inflation factors (VIF): which analyzes whether the explanatory variables are correlated.
If the variable has a value greater than 10 it is considered to have a high correlation with the other
variables, i.e., only models with VIFs less than 10 are considered.
• Normality of the residuals, which checks whether the model’s residuals are normally distributed,
using the Q-Q plot and Shapiro-Wilk tests;
• Homoscedasticity: which seeks to demonstrate that the variance of errors is constant, since it is
one of the assumptions of modeling through linear regression, based on a regression of the risk
parameter with its residues, ensuring that this same regression has a p-value greater than 5%;
• Self-correlation of errors: through the Durbin-Watson test it is assured that the result is between
1.5 and 2.5.
To correct auto-correlation problems of the errors, the ARIMA (autoregressive integrated moving
average model) model was used and again tested the performance of the final model, through the
Durbin-Watson test, after the auto-correlation correction.
Regarding the LGD Individual Credit projection model, although the aforementioned methodology
was followed, the results obtained proved to be counterintuitive, namely in terms of the economic
interpretation of the variables versus the statistical results. For this reason, all the models developed
were rejected, and a future change similar to that projected for the CH segment was assumed for this
segment (based on the model developed, whose results, in addition to being statistically significant, are
also interpretable from an economic point of view), considering the correlation between these segments
of households. As regards the forward looking models within the scope of Corporate LGD, since the
projection model was considered to be adequate both in the variables used and in its interpretation,
only the macroeconomic series were updated and the projection was updated accordingly.
44.3.3.3 Collective analysis adjustments to the automatic result of the model
After processing the automatic impairment calculation and validating the consistency of the results
obtained, all situations that may need an adjustment to the calculated impairment value are assessed.
These adjustments are reflected, whenever possible, directly in the exposures.
When this is not possible, the calculated impairment value is recorded without being allocated
to specific exposures and, for that purpose, the stage and the type of credit to which it refers are
associated. Having the prerogative to ensure that all impairment is allocated to specific exposures,
these impairment amounts initially constituted in the unallocated form will, once conditions exist, be
fully distributed over the exposures in which their allocation is determined.
In terms of the governance model, both adjustments to specific exposures and impairment amounts
constituted in the unallocated form must be validated and supported by an approval by a competent
body, which, as a rule, will be the Extended Impairment Committee.
With the exception of the adjustments already described which were made on the universe that
benefited from the moratorium in 2021, and whose impact we estimated in an impairment increase of
Euro 16 million, the remaining adjustments that are made result mainly from the need for data review
/ correction. Therefore, most of the adjustments made in 2021 reflect the application of the collective
impairment calculation rules but with corrected input data.
286
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes 44.3.4 Credit Risk Monitoring
44.3.4.1 Internal rating models for Corporates, Institutions and shares
Regarding the rating models for corporate portfolios, different approaches are adopted depending on
the size and sector of activity of the clients. Specific models are also used, adapted to loan operations
of project finance, acquisition finance, object finance, commodity finance and real estate development
finance.
Below is a summary table on the types of risk models adopted in the internal assignment of credit
ratings:
The Bank’s Rating Department has a Rating Model for the following segments: Start-ups; Individual
Entrepreneurs (ENIs); Small business; Medium-sized companies; Big companies; Real Estate and
Real Estate Income; Holding Large Company; Financial Institution; Municipalities and Institutional;
Sovereign; Project Finance; Object, Commodity and Acquisition Finance; Financial Holding.
The segments for which rating models are not available are:
•
Insurance and Pension Funds;
• Churches, political parties, and non-profit associations with a turnover of less than Euro 500
thousand.
Segmentation criteria
Model type
Description
Expert
Judgement
Sector, Size, Product
Large enterprises
Financial institutions
Municipalities
Institucional
Local and regional
administrations
Real estate (Investment/
Promotion)
Acquisition Finance
Project Finance
Object Finance
Commodity Finance
Template
Ratings atributed by
teams of analyst, using
specific models by
sector (templates) and
financial and qualitative
information.
Medium enterprises
Semi-automatic
Small enterprises
Start-Up’s and individual
entrepreneurs
Statistical
Automatic
Rating model based in
financial, qualitative and
behavioral information,
validated by analysis.
Rating model based in
financial, qualitative and
behavioral information.
Rating model based in
qualitative and behavioral
information.
Regarding the credit portfolios of Large Companies, Financial Institutions, Institutional, Local and
Regional Administrations and Specialized Loans - namely Project Finance, Object Finance, Commodity
Finance and Acquisition Finance - the credit ratings are assigned by the novobanco’s Rating
representation. This structure is made up of 7 multisectoral teams that comprise a team leader and
several specialized technical analysts. The attribution of internal risk ratings by this team to these risk
segments, classified as low default portfolios, is based on the use of “expert-based” rating models
(templates) that are based on qualitative and quantitative variables, strongly correlated with the
sector or sectors of activity in which the clients under analysis operate. With the exception of assigning
a rating to specialized loans, the methodology used by the Rating representation is also governed by a
risk analysis at the level of the maximum consolidation perimeter and by the identification of the status
of each company in the respective economic group. The internal credit ratings are validated daily in a
Rating Committee composed of members of the Rating Department’s Management and the various
specialized teams.
For the medium-sized companies’ segment, statistical rating models are used, which combine financial
data with qualitative and behavioral information. However, the publication of credit ratings requires
the execution of a previous validation process that is carried out by a technical team of risk analysts,
who also take into account behavioral variables. In addition to rating, these teams also monitor the
customers’ loan portfolio of novobanco through the preparation of risk analysis reports, as provided
for in internal regulations, in accordance with the current responsibilities / customer rating binomial,
which may include specific recommendations on the credit relationship with a given customer, as well
as technical advice on investment support operations, restructuring, or other operations subject to
credit risk.
For the business segment, statistical scoring models are also used which have, in addition to financial
and qualitative information, the behavioral variables of the companies and the partner(s) in the
calculation of credit ratings.
There are also implemented scoring models specifically aimed at quantifying the risk of start-ups
(companies established less than 2 years ago) and individual entrepreneurs (ENI). These customers
together with the small companies, depending on the exposure value, are included in the regulatory
retail portfolios.
287
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Finally, for companies in the real estate sector (companies dedicated to the activity of real estate
promotion and investment, especially small and medium-sized companies), taking into account their
specificities, the respective ratings are assigned by a specialized central team, based on use of specific
models that combine the use of quantitative and technical variables (real estate appraisals carried out
by specialized offices), as well as qualitative and behavioral variables.
With regard to exposures equated to shares held by the novobanco Group, directly or indirectly through
the holding of investment funds, as well as shareholders loans and supplementary capital contributions,
all included in the risk class of shares for the purposes of calculating credit risk weighted assets, they
are classified in the various risk segments according to the characteristics of their issuers or borrowers,
following the segmentation criteria presented above. These segmentation criteria determine the type
of rating model to be applied to the issuers of the shares (or borrowers of the shareholders loans /
supplementary capital contributions) and, therefore, to them.
44.3.4.2 Relationships between internal and external ratings
The assignment of an internal rating to entities with an external rating is made through the Markets
Template available in the Rating Calculation application. The Markets Template gathers the external
ratings that were assigned to a specific entity by the rating agencies Standard & Poor’s (S&P), Moody’s
and Fitch.
Specifically, the functionality of providing external ratings from S&P - XpressFeed feeds the application
of External Ratings on a daily basis, which allows the external ratings published by these agencies for a
given entity to be filled in the Markets Template. The external ratings assigned by Moody’s and Fitch are
not obtained automatically, having to be entered manually in the Markets Template, after consulting
the respective websites (www.moodys.com and www.fitchratings.com).
44.3.4.3 Internal scoring models for Individual portfolios
Regarding scoring models for individual portfolios, NB has origination / concession and behavioral scoring models (applied to
operations older than 6 months).
44.3.4.3 Internal scoring models for Individual portfolios
The internal rating results, in the majority of situations, from the S&P equivalent external rating and,
in exceptional situations, from the S&P equivalent external rating plus an internal adjustment, which
must always be accompanied by justifying comments prepared by the analyst.
It should be noted that the S&P equivalent external rating is obtained by making a correspondence
between the available external ratings and the rating scale of the referred financial rating agencies.
The internal ratings produced by the Markets Template and which have had adjustments must be
mandatorily approved and validated by the Rating Committee
Regarding scoring models for individual portfolios, NB has origination / concession and behavioral
These models are automatic, based on statistical models developed with internal information, considering socio-demographic
scoring models (applied to operations older than 6 months).
information, loan characteristics, behavioral information and automatic penalties (if there are warning signs). In the case of behavioral
models, information on the remaining loans of the contract holders is also considered.
These models are automatic, based on statistical models developed with internal information,
The Group is authorized by Bank of Portugal to use internal models in the calculation of regulatory capital requirements for the main
considering socio-demographic information, loan characteristics, behavioral information and automatic
portfolios of individuals: Mortgage Loans and Individual Loans. In addition, it has origination and behavioral scorings for the Credit
penalties (if there are warning signs). In the case of behavioral models, information on the remaining
Card, Overdraft and Loan Accounts products, which it uses for the purposes of designing and monitoring credit quality, however, not
loans of the contract holders is also considered.
being IRB portfolios.
The table below shows the correspondence between the external ratings S&P, Moody’s and Fitch and
the equivalent external rating S&P:
44.3.5. Delinquency
The table below displays the assets impaired, or overdue but not impaired:
The Group is authorized by Bank of Portugal to use internal models in the calculation of regulatory
capital requirements for the main portfolios of individuals: Mortgage Loans and Individual Loans. In
addition, it has origination and behavioral scorings for the Credit Card, Overdraft and Loan Accounts
products, which it uses for the purposes of designing and monitoring credit quality, however, not being
IRB portfolios.
31.12.2021
(in thousands of Euros)
Neither overdue
nor impaired
Overdue but not
impaired
Impaired
Total exposure
Impairment
Net exposure
Deposits with and loans and advances to banks
Securities held for trading
Bonds issued by government and other public entities
Securities at fair value through profit/loss - mandatory
Bonds issued by other entities
Securities at fair value through other comprehensive income
Bonds issued by government and other public entities
Bonds issued by other entities
Securities at amortised cost
Bonds issued by government and other public entities
Bonds issued by other entities
Loans and advances to customers
506 789
114 465
114 465
54 960
54 960
7 137 846
5 761 717
1 376 129
2 270 371
377 335
1 893 036
23 175 161
-
-
-
-
-
-
-
-
-
-
-
8 506
-
-
-
-
-
22 770
-
22 770
312 187
-
312 187
1 748 786
506 789
114 465
114 465
54 960
54 960
7 160 616
5 761 717
1 398 899
2 582 558
377 335
2 205 223
24 932 453
( 1 113)
-
-
-
-
( 3 716)
( 3 043)
( 673)
( 246 997)
( 543)
( 246 454)
(1 247 917)
288
505 676
114 465
114 465
54 960
54 960
7 156 900
5 758 674
1 398 226
2 335 561
376 792
1 958 769
23 684 536
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 121 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
44.3.4.3 Internal scoring models for Individual portfolios
Regarding scoring models for individual portfolios, NB has origination / concession and behavioral scoring models (applied to
operations older than 6 months).
These models are automatic, based on statistical models developed with internal information, considering socio-demographic
information, loan characteristics, behavioral information and automatic penalties (if there are warning signs). In the case of behavioral
models, information on the remaining loans of the contract holders is also considered.
The Group is authorized by Bank of Portugal to use internal models in the calculation of regulatory capital requirements for the main
portfolios of individuals: Mortgage Loans and Individual Loans. In addition, it has origination and behavioral scorings for the Credit
Card, Overdraft and Loan Accounts products, which it uses for the purposes of designing and monitoring credit quality, however, not
being IRB portfolios.
44.3.5. Delinquency
44.3.5. Delinquency
The table below displays the assets impaired, or overdue but not impaired:
The table below displays the assets impaired, or overdue but not impaired:
Neither overdue
nor impaired
Overdue but not
impaired
Impaired
Total exposure
Impairment
Net exposure
31.12.2021
(in thousands of Euros)
Deposits with and loans and advances to banks
Securities held for trading
Bonds issued by government and other public entities
Securities at fair value through profit/loss - mandatory
Bonds issued by other entities
Securities at fair value through other comprehensive income
Bonds issued by government and other public entities
Bonds issued by other entities
Securities at amortised cost
Bonds issued by government and other public entities
Bonds issued by other entities
Loans and advances to customers
506 789
114 465
114 465
54 960
54 960
7 137 846
5 761 717
1 376 129
2 270 371
377 335
1 893 036
23 175 161
-
-
-
-
-
-
-
-
-
-
-
8 506
-
-
-
-
-
22 770
-
22 770
312 187
-
312 187
1 748 786
506 789
114 465
114 465
54 960
54 960
7 160 616
5 761 717
1 398 899
2 582 558
377 335
2 205 223
24 932 453
( 1 113)
-
-
-
-
( 3 716)
( 3 043)
( 673)
( 246 997)
( 543)
( 246 454)
(1 247 917)
505 676
114 465
114 465
54 960
54 960
7 156 900
5 758 674
1 398 226
2 335 561
376 792
1 958 769
23 684 536
Neither overdue
nor impaired
Overdue but not
impaired
Impaired
Total exposure
Impairment
Net exposure
31.12.2020
(in thousands of Euros)
Deposits with and loans and advances to banks
Securities held for trading
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Bonds issued by government and other public entities
Securities at fair value through profit/loss - mandatory
Bonds issued by other entities
Securities at fair value through other comprehensive income
Bonds issued by government and other public entities
Bonds issued by other entities
Securities at amortised cost
Bonds issued by government and other public entities
Bonds issued by other entities
Loans and advances to customers
303 252
267 016
267 016
160 184
160 184
7 820 072
6 490 076
1 329 996
2 312 708
421 249
1 891 459
23 026 101
-
-
-
-
-
-
-
-
-
-
-
7 276
314 138
-
-
-
-
22 770
-
22 770
119 605
-
119 605
2 183 432
617 390
267 016
267 016
160 184
160 184
7 842 842
6 490 076
1 352 766
2 432 313
421 249
2 011 064
25 216 809
( 250 138)
-
-
-
-
( 3 697)
( 3 132)
( 565)
( 201 237)
( 579)
( 200 658)
(1 599 775)
- 121 -
367 252
267 016
267 016
160 184
160 184
7 839 145
6 486 944
1 352 201
2 231 076
420 670
1 810 406
23 617 034
Impaired exposures correspond to (i) exposures with objective evidence of loss (“Exposure in default”, according to the internal
definition of default - which corresponds to Stage 3); and (ii) exposures classified as having specific impairment after individual
impairment assessment.
Impaired exposures correspond to (i) exposures with objective evidence of loss (“Exposure in default”,
according to the internal definition of default - which corresponds to Stage 3); and (ii) exposures
classified as having specific impairment after individual impairment assessment.
The exposures classified as not having impairment relate to (i) all exposures that do not show signs of significant deterioration in
credit risk - exposures classified in Stage 1; (ii) exposures that, showing signs of significant deterioration in credit risk, have no
objective evidence of loss or specific impairment after an individual assessment of impairment.
of significant deterioration in credit risk, have no objective evidence of loss or specific impairment after
an individual assessment of impairment.
The exposures classified as not having impairment relate to (i) all exposures that do not show signs of
significant deterioration in credit risk - exposures classified in Stage 1; (ii) exposures that, showing signs
The following table presents the assets that are impaired or overdue but not impaired, split by their respective maturity or ageing (when
overdue):
The following table presents the assets that are impaired or overdue but not impaired, split by their
respective maturity or ageing (when overdue):
Securities Portfolio - debt
instruments
31.12.2021
Deposits with and loans and
advances to banks
(in thousands of Euros)
Loans and advances to customers
Overdue but not
impaired
Impaired
Overdue but not
impaired
Impaired
Overdue but not
impaired
Impaired
-
-
-
-
-
-
-
-
-
-
-
-
-
-
210 598
1 940
37 594
84 825
334 957
-
-
-
-
-
-
334 957
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6 942
1 110
387
38
29
8 506
-
-
-
-
-
-
8 506
16 199
18 033
48 558
71 646
147 118
301 554
95 322
205 485
250 897
139 442
756 086
1 447 232
1 748 786
Overdue
Up to 3 months
3 months to 1 year
1 to 3 years
3 to 5 years
More than 5 years
Due
Up to 3 months
3 months to 1 year
1 to 3 years
3 to 5 years
More than 5 years
289
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 122 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Neither overdue
Overdue but not
nor impaired
impaired
Impaired
Total exposure
Impairment
Net exposure
31.12.2020
(in thousands of Euros)
Deposits with and loans and advances to banks
Securities held for trading
Bonds issued by government and other public entities
Securities at fair value through profit/loss - mandatory
Bonds issued by other entities
Securities at fair value through other comprehensive income
Bonds issued by government and other public entities
Bonds issued by other entities
Securities at amortised cost
Bonds issued by other entities
Loans and advances to customers
Bonds issued by government and other public entities
303 252
267 016
267 016
160 184
160 184
7 820 072
6 490 076
1 329 996
2 312 708
421 249
1 891 459
23 026 101
-
-
-
-
-
-
-
-
-
-
-
7 276
314 138
-
-
-
-
-
-
22 770
22 770
119 605
119 605
2 183 432
617 390
267 016
267 016
160 184
160 184
7 842 842
6 490 076
1 352 766
2 432 313
421 249
2 011 064
25 216 809
( 250 138)
-
-
-
-
( 3 697)
( 3 132)
( 565)
( 201 237)
( 579)
( 200 658)
(1 599 775)
367 252
267 016
267 016
160 184
160 184
7 839 145
6 486 944
1 352 201
2 231 076
420 670
1 810 406
23 617 034
Impaired exposures correspond to (i) exposures with objective evidence of loss (“Exposure in default”, according to the internal
definition of default - which corresponds to Stage 3); and (ii) exposures classified as having specific impairment after individual
impairment assessment.
The exposures classified as not having impairment relate to (i) all exposures that do not show signs of significant deterioration in
credit risk - exposures classified in Stage 1; (ii) exposures that, showing signs of significant deterioration in credit risk, have no
objective evidence of loss or specific impairment after an individual assessment of impairment.
The following table presents the assets that are impaired or overdue but not impaired, split by their respective maturity or ageing (when
overdue):
Securities Portfolio - debt
instruments
31.12.2021
Deposits with and loans and
advances to banks
(in thousands of Euros)
Loans and advances to customers
Overdue but not
impaired
Impaired
Overdue but not
impaired
Impaired
Overdue but not
impaired
Impaired
-
-
-
-
-
-
-
-
-
-
-
-
-
-
210 598
1 940
37 594
84 825
334 957
-
-
-
-
-
-
334 957
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6 942
1 110
387
38
29
8 506
-
-
-
-
-
-
8 506
16 199
18 033
48 558
71 646
147 118
301 554
95 322
205 485
250 897
139 442
756 086
1 447 232
1 748 786
Overdue
Up to 3 months
3 months to 1 year
1 to 3 years
3 to 5 years
More than 5 years
Due
Up to 3 months
3 months to 1 year
1 to 3 years
3 to 5 years
More than 5 years
Securities Portfolio - debt
Securities Portfolio - debt
instruments
instruments
Overdue but not
Overdue but not
impaired
impaired
Impaired
Impaired
31.12.2020
31.12.2020
Deposits with and loans and
Deposits with and loans and
advances to banks
advances to banks
Overdue but not
Overdue but not
impaired
impaired
Overdue
Overdue
Due
Due
Up to 3 months
Up to 3 months
3 months to 1 year
3 months to 1 year
1 to 3 years
1 to 3 years
3 to 5 years
3 to 5 years
More than 5 years
More than 5 years
-
-
15 126
15 126
10 330
10 330
34 444
34 444
82 475
82 475
142 375
142 375
-
-
-
-
-
-
-
-
-
-
-
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
-
142 375
142 375
Up to 3 months
Up to 3 months
3 months to 1 year
3 months to 1 year
1 to 3 years
1 to 3 years
3 to 5 years
3 to 5 years
More than 5 years
More than 5 years
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(in thousands of Euros)
(in thousands of Euros)
Loans and advances to customers
Loans and advances to customers
Overdue but not
Overdue but not
impaired
impaired
Impaired
Impaired
5 194
5 194
1 133
1 133
357
357
290
290
302
302
7 276
7 276
-
-
-
-
-
-
-
-
-
-
-
-
7 276
7 276
15 240
15 240
57 544
57 544
93 105
93 105
233 020
233 020
219 616
219 616
618 525
618 525
37 599
37 599
308 017
308 017
273 779
273 779
149 134
149 134
796 378
796 378
1 564 907
1 564 907
2 183 432
2 183 432
- 122 -
Impaired
Impaired
34 726
34 726
-
-
-
-
-
-
-
-
34 726
34 726
-
-
-
-
-
-
-
-
279 412
279 412
279 412
279 412
314 138
314 138
The following table shows the assets impaired or overdue but not impaired, broken down by the
respective impairment Stage:
The following table shows the assets impaired or overdue but not impaired, broken down by the respective impairment Stage:
The following table shows the assets impaired or overdue but not impaired, broken down by the respective impairment Stage:
Deposits with and loans and advances to banks
Deposits with and loans and advances to banks
Securities at fair value through other comprehensive income
Securities at fair value through other comprehensive income
Securities at amortised cost
Securities at amortised cost
Loans and advances to customers
Loans and advances to customers
Stage 1
Stage 1
-
-
-
-
-
-
4 881
4 881
4 881
4 881
Stage 3
Stage 3
-
-
22 770
22 770
312 187
312 187
1 748 786
1 748 786
2 083 743
2 083 743
Total
Total
-
-
22 770
22 770
312 187
312 187
1 757 292
1 757 292
2 092 249
2 092 249
Stage 1
Stage 1
-
-
-
-
-
-
1 679
1 679
1 679
1 679
Stage 2
Stage 2
314 138
314 138
-
-
-
-
5 597
5 597
319 735
319 735
Stage 3
Stage 3
-
-
22 770
22 770
119 605
119 605
2 183 432
2 183 432
2 325 807
2 325 807
-
-
-
-
-
-
3 625
3 625
3 625
3 625
Total
Total
314 138
314 138
22 770
22 770
119 605
119 605
2 190 708
2 190 708
2 647 221
2 647 221
31.12.2021
31.12.2021
Stage 2
Stage 2
(in thousands of Euros)
(in thousands of Euros)
31.12.2020
31.12.2020
290
Credit risk by rating grade
Credit risk by rating grade
Regarding assets that are neither past due nor impaired, the distribution by rating grade is presented below. For the debt instruments,
Regarding assets that are neither past due nor impaired, the distribution by rating grade is presented below. For the debt instruments,
the rating assigned by the Rating Agencies is taken into account, for the credit to clients and cash and deposits with credit institutions,
the rating assigned by the Rating Agencies is taken into account, for the credit to clients and cash and deposits with credit institutions,
the internal rating and scoring models are used, that assign a risk rating, which is periodically reviewed. For the purposes of presenting
the internal rating and scoring models are used, that assign a risk rating, which is periodically reviewed. For the purposes of presenting
the information, the ratings have been aggregated into five major risk groups, with the last group including the unrated exposures.
the information, the ratings have been aggregated into five major risk groups, with the last group including the unrated exposures.
Prime +High
Prime +High
grade
Upper Medium
Lower Medium
Upper Medium
Grade
Lower Medium
grade
grade
Grade
grade
31.12.2021
31.12.2021
Non Investment
Non Investment
Grade
Speculative +
Grade
Speculative +
Highly
speculative
Highly
speculative
47 728
47 728
-
Deposits with and loans and advances to banks
Deposits with and loans and advances to banks
Securities held for trading
Securities held for trading
Bonds issued by government and other public entities
Securities at fair value through profit/loss - mandatory
Bonds issued by government and other public entities
Securities at fair value through profit/loss - mandatory
Bonds issued by other entities
Securities at fair value through other comprehensive income
Bonds issued by other entities
Securities at fair value through other comprehensive income
Bonds issued by government and other public entities
Bonds issued by government and other public entities
Bonds issued by other entities
Títulos ao custo amortizado
Bonds issued by other entities
Títulos ao custo amortizado
Bonds issued by government and other public entities
Bonds issued by government and other public entities
Bonds issued by other entities
Loans and advances to customers
Bonds issued by other entities
Loans and advances to customers
1 100
1 100
-
-
-
-
-
-
-
1 453 919
-
1 453 919
993 474
993 474
460 445
460 445
10 631
10 631
-
10 631
-
3 447 441
10 631
3 447 441
139 814
139 814
-
-
-
-
-
-
-
1 982 997
-
1 982 997
1 934 969
1 934 969
48 028
48 028
157 161
157 161
-
157 161
-
157 161
8 905 980
8 905 980
38 972
38 972
-
-
-
-
-
-
-
3 550 221
-
3 550 221
2 785 748
2 785 748
764 473
764 473
422 751
422 751
-
422 751
-
422 751
2 591 239
2 591 239
-
-
-
-
-
-
1 788
-
1 788
-
1 788
-
229 072
1 788
229 072
-
229 072
-
229 072
6 953 998
6 953 998
(in thousands of Euros)
(in thousands of Euros)
Others
Others
Total
Total
279 175
279 175
114 465
114 465
114 465
114 465
54 960
54 960
54 960
54 960
148 921
148 921
47 526
47 526
101 395
101 395
1 450 756
1 450 756
377 335
377 335
1 073 421
1 073 421
1 276 503
1 276 503
506 789
506 789
114 465
114 465
114 465
114 465
54 960
54 960
54 960
7 137 846
54 960
7 137 846
5 761 717
5 761 717
1 376 129
1 376 129
2 270 371
2 270 371
377 335
377 335
1 893 036
1 893 036
23 175 161
23 175 161
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 123 -
- 123 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
31.12.2020
(in thousands of Euros)
Securities Portfolio - debt
Deposits with and loans and
instruments
advances to banks
Loans and advances to customers
Overdue but not
impaired
Impaired
Overdue but not
impaired
Impaired
Overdue but not
impaired
Impaired
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15 126
10 330
34 444
82 475
142 375
-
-
-
-
-
-
142 375
-
-
-
-
-
-
-
-
-
-
-
-
-
-
34 726
34 726
-
-
-
-
-
-
-
-
279 412
279 412
314 138
5 194
1 133
357
290
302
7 276
-
-
-
-
-
-
7 276
15 240
57 544
93 105
233 020
219 616
618 525
37 599
308 017
273 779
149 134
796 378
1 564 907
2 183 432
Overdue
Up to 3 months
3 months to 1 year
1 to 3 years
3 to 5 years
More than 5 years
Due
Up to 3 months
3 months to 1 year
1 to 3 years
3 to 5 years
More than 5 years
The following table shows the assets impaired or overdue but not impaired, broken down by the respective impairment Stage:
Deposits with and loans and advances to banks
Securities at fair value through other comprehensive income
Securities at amortised cost
Loans and advances to customers
31.12.2021
31.12.2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
-
-
-
4 881
4 881
-
-
-
3 625
-
22 770
312 187
1 748 786
-
22 770
312 187
1 757 292
-
-
-
1 679
314 138
-
-
5 597
-
22 770
119 605
2 183 432
314 138
22 770
119 605
2 190 708
3 625
2 083 743
2 092 249
1 679
319 735
2 325 807
2 647 221
(in thousands of Euros)
Credit risk by rating grade
Regarding assets that are neither past due nor impaired, the distribution by rating grade is presented
below. For the debt instruments, the rating assigned by the Rating Agencies is taken into account,
for the credit to clients and cash and deposits with credit institutions, the internal rating and scoring
models are used, that assign a risk rating, which is periodically reviewed. For the purposes of presenting
the information, the ratings have been aggregated into five major risk groups, with the last group
including the unrated exposures.
Credit risk by rating grade
Regarding assets that are neither past due nor impaired, the distribution by rating grade is presented below. For the debt instruments,
the rating assigned by the Rating Agencies is taken into account, for the credit to clients and cash and deposits with credit institutions,
the internal rating and scoring models are used, that assign a risk rating, which is periodically reviewed. For the purposes of presenting
the information, the ratings have been aggregated into five major risk groups, with the last group including the unrated exposures.
31.12.2021
(in thousands of Euros)
Prime +High
grade
Upper Medium
Grade
Lower Medium
grade
Deposits with and loans and advances to banks
Securities held for trading
Bonds issued by government and other public entities
Securities at fair value through profit/loss - mandatory
Bonds issued by other entities
Securities at fair value through other comprehensive income
Bonds issued by government and other public entities
Bonds issued by other entities
Títulos ao custo amortizado
Bonds issued by government and other public entities
Bonds issued by other entities
Loans and advances to customers
1 100
-
-
-
-
1 453 919
993 474
460 445
10 631
-
10 631
3 447 441
139 814
-
-
-
-
1 982 997
1 934 969
48 028
157 161
-
157 161
8 905 980
38 972
-
-
-
-
3 550 221
2 785 748
764 473
422 751
-
422 751
2 591 239
Non Investment
Grade
Speculative +
Highly
speculative
47 728
-
-
-
-
1 788
-
1 788
229 072
-
229 072
6 953 998
Others
Total
279 175
114 465
114 465
54 960
54 960
148 921
47 526
101 395
1 450 756
377 335
1 073 421
1 276 503
506 789
114 465
114 465
54 960
54 960
7 137 846
5 761 717
1 376 129
2 270 371
377 335
1 893 036
23 175 161
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Prime +High
grade
Upper Medium
Grade
31.12.2020
Lower Medium
grade
Non Investment
Grade
Speculative +
Highly
speculative
(in thousands of Euros)
Others
Total
- 123 -
Deposits with and loans and advances to banks
Securities held for trading
Bonds issued by government and other public entities
Instrumentos de dívida - emissores públicos
Securities at fair value through profit/loss - mandatory
Instrumentos de dívida - emissores públicos
Bonds issued by other entities
Securities at fair value through other comprehensive income
Bonds issued by government and other public entities
Bonds issued by other entities
Títulos ao custo amortizado
Bonds issued by government and other public entities
Bonds issued by other entities
Loans and advances to customers
1 096
-
-
-
-
-
-
1 415 572
966 035
449 537
-
-
-
3 734 056
139 859
-
-
-
32 670
-
32 670
2 335 007
2 322 904
12 103
51 608
-
51 608
8 854 914
48 121
267 016
267 016
-
-
-
-
3 330 418
2 946 842
383 576
140 510
-
140 510
2 469 068
38 073
-
-
-
-
-
-
-
-
-
37 958
-
37 958
6 855 355
76 103
-
-
-
127 514
-
127 514
739 075
254 295
484 780
2 082 632
421 249
1 661 383
1 112 709
303 252
267 016
267 016
-
160 184
-
160 184
7 820 072
6 490 076
1 329 996
2 312 708
421 249
1 891 459
23 026 101
As at 31 December 2021 and 2020, the analysis of the gross loans and advances to customers’ exposure and impairment constituted,
by segment, is presented as follows:
Segment
Performing or with a delay <
30 days
With a delay > 30 days
Total
Days of delay
Total
<= 90 days
> 90 days
Exposure
Impairment
Perfoming
Non-Perfoming
Total Credit
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Corporate
Mortgage loans
Consumer and other loans
12 191 609
320 313
132 381
9 606 873
1 207 196
25 093
22 130
33 754
8 612
8 736
1 337
1 552
12 323 990
329 049
9 640 627
1 215 808
26 430
23 682
873 543
123 210
153 471
361 247
516 492
322 384
1 390 035
683 631
13 714 025
20 723
136 985
48 176
37 136
8 867
18 550
171 386
190 607
29 590
155 535
9 812 013
1 406 415
1 012 680
56 020
179 217
Total
23 005 678
367 536
174 747
11 625
23 180 425
379 161
1 150 224
518 955
601 804
349 801
1 752 028
868 756
24 932 453
1 247 917
31.12.2021
(in thousands of Euros)
Segment
Performing or with a delay <
30 days
With a delay > 30 days
Total
Days of delay
Total
<= 90 days
> 90 days
Exposure
Impairment
Perfoming
Non-Perfoming
Total Credit
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Corporate
Mortgage loans
Consumer and other loans
12 109 249
328 589
9 723 675
1 116 057
17 526
21 113
7 200
65 067
12 129
645
1 706
2 391
12 116 449
329 234
9 788 742
1 128 186
19 232
23 504
940 235
110 577
147 730
471 147
816 374
544 639
1 756 609
1 015 786
17 312
111 134
122 182
57 382
29 301
43 224
221 711
205 112
46 613
165 406
13 873 058
10 010 453
1 333 298
1 345 020
65 845
188 910
Total
22 948 981
367 228
84 396
4 742
23 033 377
371 970
1 198 542
610 641
984 890
617 164
2 183 432
1 227 805
25 216 809
1 599 775
31.12.2020
(in thousands of Euros)
291
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 124 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Prime +High
Upper Medium
Lower Medium
grade
Grade
grade
Speculative +
Others
Total
(in thousands of Euros)
31.12.2020
Non Investment
Grade
Highly
speculative
Deposits with and loans and advances to banks
1 096
139 859
38 073
76 103
Securities held for trading
Bonds issued by government and other public entities
Instrumentos de dívida - emissores públicos
Securities at fair value through profit/loss - mandatory
Instrumentos de dívida - emissores públicos
Bonds issued by other entities
-
-
-
-
-
-
Securities at fair value through other comprehensive income
Bonds issued by government and other public entities
Bonds issued by other entities
Títulos ao custo amortizado
Bonds issued by government and other public entities
Bonds issued by other entities
Loans and advances to customers
1 415 572
966 035
449 537
-
-
-
3 734 056
-
-
-
-
32 670
32 670
2 335 007
2 322 904
12 103
51 608
-
51 608
8 854 914
48 121
267 016
267 016
-
-
-
-
3 330 418
2 946 842
383 576
140 510
-
140 510
2 469 068
127 514
160 184
-
-
-
-
-
-
-
-
-
37 958
-
37 958
6 855 355
-
-
-
-
127 514
739 075
254 295
484 780
2 082 632
421 249
1 661 383
1 112 709
303 252
267 016
267 016
-
-
160 184
7 820 072
6 490 076
1 329 996
2 312 708
421 249
1 891 459
23 026 101
As at 31 December 2021 and 2020, the analysis of the gross loans and advances to customers’ exposure
and impairment constituted, by segment, is presented as follows:
As at 31 December 2021 and 2020, the analysis of the gross loans and advances to customers’ exposure and impairment constituted,
by segment, is presented as follows:
Segment
Performing or with a delay <
30 days
With a delay > 30 days
Total
Days of delay
<= 90 days
> 90 days
Total
Exposure
Impairment
Perfoming
Non-Perfoming
Total Credit
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Corporate
Mortgage loans
Consumer and other loans
12 191 609
320 313
132 381
9 606 873
1 207 196
25 093
22 130
33 754
8 612
8 736
1 337
1 552
12 323 990
329 049
9 640 627
1 215 808
26 430
23 682
873 543
123 210
153 471
361 247
516 492
322 384
1 390 035
683 631
13 714 025
20 723
136 985
48 176
37 136
8 867
18 550
171 386
190 607
29 590
155 535
9 812 013
1 406 415
1 012 680
56 020
179 217
Total
23 005 678
367 536
174 747
11 625
23 180 425
379 161
1 150 224
518 955
601 804
349 801
1 752 028
868 756
24 932 453
1 247 917
31.12.2021
(in thousands of Euros)
Segment
Performing or with a delay <
30 days
With a delay > 30 days
Total
Days of delay
<= 90 days
> 90 days
Total
Exposure
Impairment
Perfoming
Non-Perfoming
Total Credit
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Corporate
Mortgage loans
Consumer and other loans
12 109 249
328 589
9 723 675
1 116 057
17 526
21 113
7 200
65 067
12 129
645
1 706
2 391
12 116 449
329 234
9 788 742
1 128 186
19 232
23 504
940 235
110 577
147 730
471 147
816 374
544 639
1 756 609
1 015 786
17 312
111 134
122 182
57 382
29 301
43 224
221 711
205 112
46 613
165 406
13 873 058
10 010 453
1 333 298
1 345 020
65 845
188 910
Total
22 948 981
367 228
84 396
4 742
23 033 377
371 970
1 198 542
610 641
984 890
617 164
2 183 432
1 227 805
25 216 809
1 599 775
31.12.2020
(in thousands of Euros)
As at 31 December 2021 and 2020, the analysis of the Loans and advances to customers’ portfolio, by
segment and by year of reference was as follows:
As at 31 December 2021 and 2020, the analysis of the Loans and advances to customers’ portfolio, by segment and by year of
reference was as follows:
Year of
production
Number of
operations
Amount
Impairment
Number of
operations
Amount
Impairment
Number of
operations
Amount
Impairment
Number of
operations
Amount
Impairment
Corporate
Mortgage loans
Consumer and other loans
Total
31.12.2021
(in thousands of Euros)
2004 and prior
4 099
219 797
4 585
64 530
1 322 038
10 532
717 590
54 041
11 689
786 219
1 595 876
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
769
975
1 336
1 140
851
1 003
994
1 280
1 669
1 760
2 570
3 692
6 282
7 851
47 005
171 971
284 776
473 578
200 431
170 833
184 975
242 759
415 767
2 883
29 831
50 359
24 647
24 417
19 125
48 473
41 290
77 995
314 087
110 955
626 789
122 220
648 093
879 951
1 506 020
51 245
63 746
89 004
8 057
320 861
13 477
600 300
20 113
891 891
13 553
633 292
2 725
4 098
6 739
4 542
2 452
3 204
1 221
834
438 134
455 499
199 745
85 133
130 239
1 518
94 755
164 306
373 517
675 178
899 601
737
810
1 958
3 757
3 656
10 142
12 829
23 922
19 181
11 337
17 657
19 395
25 833
23 129
21 449
6 837
7 999
11 051
9 037
17 744
24 310
18 364
15 821
25 084
21 714
266
849
705
349
8 663
794
493
1 094
1 769
615
26 890
118 868
91 085
18 968
27 281
374 703
780 270
45 371
1 187 718
33 874
1 115 907
20 933
26 875
24 696
29 481
27 552
24 969
32 173
656 309
650 642
403 084
343 713
571 090
430 556
909 963
77 401
21 746
52 072
1 099 011
42 807
48 286
94 954
57 520
144 321
6 888
6 393
63 201
1 650 083
75 259
2 549 942
8 745
8 215
4 307
2 368
2 754
1 760
2 713
5 573
8 633
9 888
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 429 806
153 837
969 282
10 070
9 349
2019
3 519
63 893
232 921
10 950
83 312
3 632 009
11 324
2 486 691
12 964
2 410 696
60 824
37 244
7 358
7 450
723 917
834 325
2 125
1 593
41 957
198 295
60 640
327 653
6 576
8 293
60 639
3 408 903
81 054
3 572 674
26 806
5 874
34 778
57 803
29 538
35 532
23 123
50 187
43 218
81 282
112 307
214 115
74 949
74 391
99 053
- 124 -
168 306
69 525
47 130
69 908
13 714 025
1 012 680
199 564
9 812 013
56 020
1 244 457
1 406 415
179 217
1 513 929
24 932 453
1 247 917
2020
2021
Total
Year of
production
Number of
operations
Amount
Impairment
Number of
operations
Amount
Impairment
Number of
operations
Amount
Impairment
Number of
operations
Amount
Impairment
Corporate
Mortgage loans
Consumer and other loans
Total
292
2004 and prior
4 508
253 737
12 541
70 884
1 525 145
15 028
732 974
54 539
16 638
808 366
1 833 421
31.12.2020
(in thousands of Euros)
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
801
1 047
1 311
1 275
991
1 224
1 208
1 500
2 065
2 141
3 442
4 910
7 939
8 993
66 294
228 528
308 621
507 028
282 231
303 769
214 814
6 277
52 349
46 549
30 559
41 733
76 409
48 687
379 756
133 774
506 226
116 278
456 374
193 612
730 681
146 759
806 562
1 124 252
62 679
66 057
8 760
363 661
14 695
672 558
21 786
1 003 716
14 578
709 233
9 533
8 908
4 847
2 626
3 041
1 933
2 977
6 108
9 475
492 528
508 778
226 201
96 782
149 827
107 869
185 390
424 352
762 490
3 964
5 747
9 050
5 732
4 356
4 276
2 214
1 418
1 520
743
787
1 627
3 039
2 716
2 358
1 270
10 920
18 044
25 665
20 567
12 380
19 274
22 191
28 413
25 794
25 229
7 453
9 413
12 887
10 778
19 179
29 123
20 942
18 224
27 293
23 155
388
1 029
1 567
775
8 274
1 381
1 145
1 873
8 798
1 101
20 481
33 786
437 408
910 499
48 762
1 325 224
36 420
1 227 039
22 904
29 406
28 246
32 539
30 900
29 303
793 938
841 670
461 957
494 762
683 346
587 398
30 078
124 058
82 465
36 497
1 040 129
49 529
92 372
22 336
60 547
1 323 286
56 275
129 533
10 083
73 689
2 016 275
1 914 976
117 147
10 800
1 006 802
67 185
198 768
10 025
86 978
3 120 546
10 488
2 771 828
137 204
10 672
1 035 025
74 966
304 366
13 832
96 126
4 111 219
17 700
3 017 381
56 406
7 339
740 096
48 711
251 215
7 200
73 750
4 008 692
Total
71 543
13 873 058
1 345 020
208 962
10 010 453
65 845
1 268 195
1 333 298
188 910
1 548 700
25 216 809
1 599 775
44 207
10 629
59 125
57 166
37 066
54 363
82 066
52 046
137 065
126 596
195 456
230 011
86 642
79 179
129 888
153 394
64 876
The figures presented include, in addition to all new operations of the reference year, renewals, interventions and restructu rings of
operations originated in previous years, including the period prior to the setting up of novobanco.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 126 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
As at 31 December 2021 and 2020, the analysis of the Loans and advances to customers’ portfolio, by segment and by year of
reference was as follows:
Year of
production
Number of
operations
Number of
operations
Amount
Impairment
Amount
Impairment
Amount
Impairment
Amount
Impairment
Number of
operations
Corporate
Mortgage loans
Consumer and other loans
Total
31.12.2021
Number of
operations
2004 and prior
4 099
219 797
4 585
64 530
1 322 038
10 532
717 590
54 041
11 689
786 219
1 595 876
(in thousands of Euros)
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
769
975
1 336
1 140
851
1 003
994
1 280
1 669
1 760
2 570
3 692
6 282
7 851
9 349
47 005
171 971
284 776
473 578
200 431
170 833
184 975
242 759
415 767
2 883
29 831
50 359
24 647
24 417
19 125
48 473
41 290
77 995
314 087
110 955
626 789
122 220
648 093
879 951
1 506 020
51 245
63 746
89 004
8 057
320 861
13 477
600 300
20 113
891 891
13 553
633 292
8 745
8 215
4 307
2 368
2 754
1 760
2 713
5 573
8 633
9 888
438 134
455 499
199 745
85 133
94 755
164 306
373 517
675 178
899 601
2 429 806
153 837
10 070
969 282
11 324
2 486 691
12 964
2 410 696
60 824
37 244
7 358
7 450
723 917
834 325
2 725
4 098
6 739
4 542
2 452
3 204
1 221
834
737
810
1 958
3 757
3 656
3 519
2 125
1 593
130 239
1 518
10 142
12 829
23 922
19 181
11 337
17 657
19 395
25 833
23 129
21 449
42 807
48 286
6 837
7 999
11 051
9 037
17 744
24 310
18 364
15 821
25 084
21 714
94 954
57 520
144 321
266
849
705
349
8 663
794
493
1 094
1 769
615
18 968
27 281
374 703
780 270
45 371
1 187 718
33 874
1 115 907
20 933
26 875
24 696
29 481
27 552
24 969
32 173
656 309
650 642
403 084
343 713
571 090
430 556
909 963
6 888
6 393
63 201
1 650 083
75 259
2 549 942
26 890
118 868
91 085
77 401
21 746
52 072
1 099 011
63 893
232 921
10 950
83 312
3 632 009
41 957
198 295
60 640
327 653
6 576
8 293
60 639
3 408 903
81 054
3 572 674
26 806
5 874
34 778
57 803
29 538
35 532
23 123
50 187
43 218
81 282
112 307
214 115
74 949
74 391
99 053
168 306
69 525
47 130
Total
69 908
13 714 025
1 012 680
199 564
9 812 013
56 020
1 244 457
1 406 415
179 217
1 513 929
24 932 453
1 247 917
31.12.2020
(in thousands of Euros)
Year of
production
Number of
operations
Amount
Impairment
Number of
operations
Amount
Impairment
Number of
operations
Amount
Impairment
Number of
operations
Amount
Impairment
Corporate
Mortgage loans
Consumer and other loans
Total
2004 and prior
4 508
253 737
12 541
70 884
1 525 145
15 028
732 974
54 539
16 638
808 366
1 833 421
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
801
1 047
1 311
1 275
991
1 224
1 208
1 500
2 065
2 141
3 442
4 910
7 939
8 993
66 294
228 528
308 621
507 028
282 231
303 769
214 814
6 277
52 349
46 549
30 559
41 733
76 409
48 687
379 756
133 774
506 226
116 278
456 374
193 612
730 681
146 759
806 562
1 124 252
62 679
66 057
8 760
363 661
14 695
672 558
21 786
1 003 716
14 578
709 233
9 533
8 908
4 847
2 626
3 041
1 933
2 977
6 108
9 475
492 528
508 778
226 201
96 782
149 827
107 869
185 390
424 352
762 490
1 914 976
117 147
10 800
1 006 802
10 488
2 771 828
137 204
10 672
1 035 025
17 700
3 017 381
56 406
7 339
740 096
3 964
5 747
9 050
5 732
4 356
4 276
2 214
1 418
1 520
743
787
1 627
3 039
2 716
2 358
1 270
10 920
18 044
25 665
20 567
12 380
19 274
22 191
28 413
25 794
25 229
7 453
9 413
12 887
10 778
19 179
29 123
20 942
18 224
27 293
23 155
388
1 029
1 567
775
8 274
1 381
1 145
1 873
8 798
1 101
20 481
33 786
437 408
910 499
48 762
1 325 224
36 420
1 227 039
22 904
29 406
28 246
32 539
30 900
29 303
793 938
841 670
461 957
494 762
683 346
587 398
30 078
124 058
82 465
36 497
1 040 129
49 529
92 372
22 336
60 547
1 323 286
56 275
129 533
10 083
73 689
2 016 275
67 185
198 768
10 025
86 978
3 120 546
74 966
304 366
13 832
96 126
4 111 219
48 711
251 215
7 200
73 750
4 008 692
44 207
10 629
59 125
57 166
37 066
54 363
82 066
52 046
137 065
126 596
195 456
230 011
86 642
79 179
129 888
153 394
64 876
Total
71 543
13 873 058
1 345 020
208 962
10 010 453
65 845
1 268 195
1 333 298
188 910
1 548 700
25 216 809
1 599 775
The figures presented include, in addition to all new operations of the reference year, renewals, interventions and restructu rings of
operations originated in previous years, including the period prior to the setting up of novobanco.
The figures presented include, in addition to all new operations of the reference year, renewals,
interventions and restructurings of operations originated in previous years, including the period prior
to the setting up of novobanco.
44.3.6 Collaterals
44.3.6 Collaterals
In order to mitigate credit risk, credit operations have associated guarantees, namely mortgages or pledges. The fair value of these
guarantees is determined at the date of granting the credit and is periodically reassessed. Below is the gross value of the credits and
the respective fair value of the collateral, limited to the value of the associated credit:
In order to mitigate credit risk, credit operations have associated guarantees, namely mortgages or
pledges. The fair value of these guarantees is determined at the date of granting the credit and is
periodically reassessed. Below is the gross value of the credits and the respective fair value of the
collateral, limited to the value of the associated credit:
Amount of loans
Impairment
Net Value
Fair value of
collateral
Amount of loans
Impairment
Net Value
31.12.2021
31.12.2020
(in thousands of Euros)
Fair value of
collateral
Individuals - Mortgage
Mortgages
Pledges
Not collateralized
Individuals - Other
Mortgages
Pledges
Not collateralized
Corporate
9 568 808
169 020
74 185
9 812 013
250 032
263 320
893 063
1 406 415
( 53 088)
( 307)
( 2 625)
( 56 020)
( 4 807)
( 120 324)
( 54 086)
( 179 217)
Mortgages
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Pledges
Not collateralized
3 527 247
2 055 529
8 131 249
13 714 025
( 356 772)
( 162 391)
( 493 517)
(1 012 680)
9 515 720
168 713
71 560
9 755 993
245 225
142 996
838 977
1 227 198
3 170 475
1 893 138
7 637 732
12 701 345
9 558 200
162 514
-
9 720 714
247 376
144 768
-
392 144
3 159 754
760 456
-
3 920 210
9 801 563
113 702
95 188
10 010 453
219 239
267 102
846 957
1 333 298
3 622 160
2 210 683
8 040 215
13 873 058
( 58 626)
( 162)
( 7 057)
( 65 845)
( 7 618)
( 123 190)
( 58 102)
( 188 910)
( 560 905)
( 284 521)
( 499 594)
(1 345 020)
9 742 937
113 540
88 131
9 944 608
211 621
143 912
788 855
1 144 388
9 786 018
113 198
-
9 899 216
216 301
148 584
-
364 885
3 061 255
1 926 162
7 540 621
12 528 038
- 126 -
3 130 712
836 026
-
3 966 738
293
11 096
1 905
18 478
13 225
2 241
155
1 565
487 506
253 312
797 654
460 762
530 515
451 567
170 322
2 183
18 528
13 225
2 241
155
1 565
421 280
868 368
460 762
530 515
451 567
170 322
Total
24 932 453
( 1 247 917)
23 684 536
14 033 068
25 216 809
( 1 599 775)
23 617 034
14 230 839
The difference between the value of the credit and the fair value of the collateral represents the total credit exposure that exceeds
the value of the collateral, this value not being impacted by collaterals with a fair value higher than the credit to which they are
associated.
The details of the collateral – mortgages is presented as follows:
Collateral intervals a)
Individuals - Mortgage
loans
Individuals - Other loans
Corporate loans
Total
Number
Amount
Number
Amount
Number
Amount
Number
Amount
194 158
9 332 748
5 823
234 146
211 077
10 054 400
31.12.2021
(in thousands of Euros)
264
47
161 929
63 523
6 039
7 191
<0,5M€
>= 0,5M€ e <1,0M€
>= 1,0M€ e <5,0M€
>= 5,0M€ e <10,0M€
>= 10,0M€ e <20,0M€
>= 20,0M€ e <50,0M€
>=50M€
<0,5M€
>= 0,5M€ and <1,0M€
>= 1,0M€ and <5,0M€
>= 5,0M€ and <10,0M€
>= 10,0M€ and <20,0M€
>= 20,0M€ and <50,0M€
>=50M€
14
3
-
-
-
-
26
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
a) The allocation by intervals was based on the total amount of collateral per credit agreement
194 469
9 558 200
5 840
247 376
48 665
3 151 638
248 974
12 957 214
Collateral intervals a)
Individuals - Mortgage
loans
Individuals - Other loans
Corporate loans
Total
Number
Amount
Number
Amount
Number
Amount
Number
Amount
202 981
9 593 284
5 107
200 866
217 836
10 299 567
31.12.2020
(in thousands of Euros)
248
36
146 377
46 357
8 552
6 883
9 748
2 202
7 537
5 979
4 014
170
1 566
505 417
264 144
839 109
401 084
477 539
471 926
171 493
2 476
7 576
5 979
4 014
170
1 566
419 073
892 349
401 084
477 539
471 926
171 493
a) The allocation by intervals was based on the total amount of collateral per credit agreement
to the gross value of the individual covered credits.
The values of mortgages collateral, shown above, represents the maximum coverage value of the covered assets, i.e., which concur
203 265
9 786 018
5 136
216 301
31 216
3 130 712
239 617
13 133 031
In assessing the risk of an operation or set of operations, the elements of credit risk mitigation associated with them are considered,
in accordance with internal rules and procedures.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 126 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
In order to mitigate credit risk, credit operations have associated guarantees, namely mortgages or pledges. The fair value o f these
guarantees is determined at the date of granting the credit and is periodically reassessed. Below is the gross value of the credits and
the respective fair value of the collateral, limited to the value of the associated credit:
44.3.6 Collaterals
Individuals - Mortgage
Mortgages
Pledges
Not collateralized
Individuals - Other
Mortgages
Pledges
Not collateralized
Corporate
Mortgages
Pledges
Not collateralized
Total
Amount of loans
Impairment
Net Value
Amount of loans
Impairment
Net Value
31.12.2021
31.12.2020
(in thousands of Euros)
Fair value of
collateral
9 568 808
169 020
74 185
9 812 013
250 032
263 320
893 063
1 406 415
3 527 247
2 055 529
8 131 249
13 714 025
( 53 088)
( 307)
( 2 625)
( 56 020)
( 4 807)
( 120 324)
( 54 086)
( 179 217)
( 356 772)
( 162 391)
( 493 517)
(1 012 680)
9 515 720
168 713
71 560
9 755 993
245 225
142 996
838 977
1 227 198
3 170 475
1 893 138
7 637 732
12 701 345
Fair value of
collateral
9 558 200
162 514
-
9 720 714
247 376
144 768
-
392 144
3 159 754
760 456
-
3 920 210
9 801 563
113 702
95 188
10 010 453
219 239
267 102
846 957
1 333 298
3 622 160
2 210 683
8 040 215
13 873 058
( 58 626)
( 162)
( 7 057)
( 65 845)
( 7 618)
( 123 190)
( 58 102)
( 188 910)
( 560 905)
( 284 521)
( 499 594)
(1 345 020)
9 742 937
113 540
88 131
9 944 608
211 621
143 912
788 855
1 144 388
3 061 255
1 926 162
7 540 621
12 528 038
9 786 018
113 198
-
9 899 216
216 301
148 584
-
364 885
3 130 712
836 026
-
3 966 738
24 932 453
( 1 247 917)
23 684 536
14 033 068
25 216 809
( 1 599 775)
23 617 034
14 230 839
The difference between the value of the credit and the fair value of the collateral represents the total
credit exposure that exceeds the value of the collateral, this value not being impacted by collaterals
with a fair value higher than the credit to which they are associated.
The difference between the value of the credit and the fair value of the collateral represents the total credit exposure that exceeds
the value of the collateral, this value not being impacted by collaterals with a fair value higher than the credit to which t hey are
associated.
The details of the collateral – mortgages is presented as follows:
The details of the collateral – mortgages is presented as follows:
Collateral intervals a)
Individuals - Mortgage
loans
Individuals - Other loans
Corporate loans
Total
Number
Amount
Number
Amount
Number
Amount
Number
Amount
31.12.2021
(in thousands of Euros)
<0,5M€
>= 0,5M€ e <1,0M€
>= 1,0M€ e <5,0M€
>= 5,0M€ e <10,0M€
>= 10,0M€ e <20,0M€
>= 20,0M€ e <50,0M€
>=50M€
194 158
9 332 748
5 823
234 146
264
47
161 929
63 523
-
-
-
-
-
-
-
-
14
3
-
-
-
-
6 039
7 191
-
-
-
-
11 125
1 965
18 534
13 225
2 241
155
1 565
490 422
256 215
799 951
460 762
530 515
451 567
170 322
211 106
10 057 316
2 243
18 584
13 225
2 241
155
1 565
424 183
870 665
460 762
530 515
451 567
170 322
194 469
9 558 200
5 840
247 376
48 810
3 159 754
249 119
12 965 330
a) The allocation by intervals was based on the total amount of collateral per credit agreement
Collateral intervals a)
Individuals - Mortgage
loans
Individuals - Other loans
Corporate loans
Total
Number
Amount
Number
Amount
Number
Amount
Number
Amount
31.12.2020
(in thousands of Euros)
<0,5M€
>= 0,5M€ and <1,0M€
>= 1,0M€ and <5,0M€
>= 5,0M€ and <10,0M€
>= 10,0M€ and <20,0M€
>= 20,0M€ and <50,0M€
>=50M€
202 981
9 593 284
5 107
200 866
248
36
146 377
46 357
-
-
-
-
-
-
-
-
26
3
-
-
-
-
8 552
6 883
-
-
-
-
9 748
2 202
7 537
5 979
4 014
170
1 566
505 417
264 144
839 109
401 084
477 539
471 926
171 493
217 836
10 299 567
2 476
7 576
5 979
4 014
170
1 566
419 073
892 349
401 084
477 539
471 926
171 493
203 265
9 786 018
5 136
216 301
31 216
3 130 712
239 617
13 133 031
a) The allocation by intervals was based on the total amount of collateral per credit agreement
The values of mortgages collateral, shown above, represents the maximum coverage value of the covered assets, i.e., which concur
to the gross value of the individual covered credits.
The values of mortgages collateral, shown above, represents the maximum coverage value of the
covered assets, i.e., which concur to the gross value of the individual covered credits.
• Financial pledges, where the value considered corresponds to the quotation on the last day of the
month, in the case of being a listed security, or the value of the pledge, in the case of being cash.
In assessing the risk of an operation or set of operations, the elements of credit risk mitigation associated with them are considered,
in accordance with internal rules and procedures.
In assessing the risk of an operation or set of operations, the elements of credit risk mitigation
associated with them are considered, in accordance with internal rules and procedures.
The relevant collaterals are essentially the following:
• Real estate, where the value considered is the correspondent to the last available valuation;
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The acceptance of collateral as a guarantee for credit operations refers to the need to define and
implement risk mitigation techniques to which these collaterals are exposed. Thus, and as an approach
to this matter, the Group stipulated a set of procedures applicable to collateral (namely financial and real
estate), which cover, among others, the volatility of the collateral value, its liquidity, and an indication
as to the recovery rates associated with each type of collateral.
- 127 -
294
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The relevant collaterals are essentially the following:
Real estate, where the value considered is the correspondent to the last available valuation;
Financial pledges, where the value considered corresponds to the quotation on the last day of the month, in the case of being a
listed security, or the value of the pledge, in the case of being cash.
The acceptance of collateral as a guarantee for credit operations refers to the need to define and implement risk mitigation techniques
to which these collaterals are exposed. Thus, and as an approach to this matter, the Group stipulated a set of procedures app licable
to collateral (namely financial and real estate), which cover, among others, the volatility of the collateral value, its liquidity, and an
indication as to the recovery rates associated with each type of collateral.
The internal rules on credit powers thus have a specific chapter on this point, "Acceptance of collateral - techniques for mitigating the
risks to which collateral is exposed, namely liquidity and volatility risks".
The revaluation process for real estate is performed by independent valuation experts registered i n CMVM, following the
The internal rules on credit powers thus have a specific chapter on this point, “Acceptance of collateral
methodologies as described in Note 8.6.
- techniques for mitigating the risks to which collateral is exposed, namely liquidity and volatility risks”.
44.3.7 Credit risk concentration
The revaluation process for real estate is performed by independent valuation experts registered in
CMVM, following the methodologies as described in Note 8.6.
44.3.7 Credit risk concentration
The analysis of risk exposure by sector of activity, as at 31 December 2021 and 2020, is presented as
follows:
The analysis of risk exposure by sector of activity, as at 31 December 2021 and 2020, is presented as follows:
31.12.2021
(in thousands of Euros)
Loans and advances to
customers
Financial
assets held for
trading
Derivatives for trading
and fair value option
derivates
Financial assets at fair
value through profit or
loss -mandatory
Derivatives -
hedge
accounting
Financial assets at fair value
through other comprehensive
income
Financial assets at amortised
cost
Guarantees and endorsements
provided
Gross amount
Impairment
Gross amount
Impairment
Gross amount
Impairment
Gross amount
Impairment
Agriculture, Forestry and Fishery
Mining
Food, Beverages and Tobacco
Textiles and Clothing
Leather and Shoes
Wood and Cork
Paper and Printing Industry
Refining of Petroleum
Chemicals and Rubber
Non-metallic Minerals
Metallurgical Industries and Metallic Products
Production of Machinery, Equipment and Electrical Devices
Production of Transport Material
Other Transforming Industries
Electricity, Gas and Water
Construction and Public Works
Wholesale and Retail Trade
Tourism
Transport and Communication
Financial Activities
Real Estate Activities
Services Provided to Companies
Public Administration and Services
Other activities of collective services
Mortgage Loans
Consumers Loans
Others
329 579
40 882
511 938
372 933
79 044
108 868
149 815
11 459
338 994
168 159
391 734
170 744
119 030
141 936
296 885
1 295 265
1 405 455
1 055 211
864 952
469 127
1 666 331
2 438 656
582 357
592 331
9 812 013
1 406 415
112 340
( 8 977)
( 333)
( 14 257)
( 13 920)
( 728)
( 2 996)
( 10 180)
( 20)
( 5 157)
( 3 342)
( 11 974)
( 9 219)
( 3 514)
( 10 598)
( 3 323)
( 135 843)
( 48 479)
( 97 092)
( 51 401)
( 44 808)
( 144 565)
( 225 158)
( 22 872)
( 75 562)
( 56 020)
( 179 217)
( 68 362)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
114 465
-
-
-
-
TOTAL
24 932 453
( 1 247 917)
114 465
397
-
7 233
290
5
500
96
-
271
-
370
159
43
-
17 062
75 005
765
191
49 111
101 410
6 281
3 250
-
758
-
-
2
263 199
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
794 368
2 751
95
-
2 378
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19 639
-
-
-
-
-
-
-
29 007
14 189
-
-
-
-
-
-
19 410
-
16 235
66 078
-
-
53 579
-
40 669
118
96 999
913 525
908
85 155
5 761 969
123 155
-
-
-
( 14)
( 13)
-
-
-
-
-
-
( 13)
-
( 11)
( 49)
-
-
( 41)
-
( 29)
-
( 61)
( 317)
-
( 45)
( 3 043)
( 80)
-
-
-
20 249
19 391
76 401
4 298
1 501
2 199
1 497
40 793
133 694
33 754
1 299
48 010
15 046
4 983
113 203
196 417
50 398
-
43 865
479 556
178 280
655 753
377 335
84 636
-
-
-
( 45)
( 4)
( 196)
( 2)
( 6)
( 12)
( 4)
( 22)
( 123)
( 153)
( 62)
( 24)
( 8)
( 20)
( 3 988)
( 94 332)
( 90)
-
( 191)
( 1 424)
( 33 430)
( 111 600)
( 543)
( 718)
-
-
-
11 196
5 972
49 435
7 450
1 363
7 322
2 150
4 022
18 453
15 177
31 575
20 503
10 669
19 208
33 504
672 470
202 603
51 900
351 109
150 817
107 615
386 548
20 611
36 256
-
-
16 315
799 592
19 639
7 220 996
( 3 716)
2 582 558
( 246 997)
2 234 243
( 6 318)
( 205)
( 319)
( 741)
( 122)
( 259)
( 18)
( 1)
( 80)
( 305)
( 456)
( 2 248)
( 527)
( 2 821)
( 687)
( 37 764)
( 3 481)
( 1 076)
( 2 039)
( 3 380)
( 5 246)
( 10 115)
( 110)
( 955)
-
-
( 326)
( 79 599)
31.12.2020
(in thousands of Euros)
Loans and advances to
customers
Financial
assets held for
trading
Derivatives for trading
and fair value option
derivates
Financial assets at fair
value through profit or
loss -mandatory
Derivatives -
hedge
accounting
Financial assets at fair value
through other comprehensive
income
Financial assets at amortised
cost
Guarantees and endorsements
provided
Gross amount
Impairment
Gross amount
Impairment
Gross amount
Impairment
Gross amount
Impairment
Agriculture, Forestry and Fishery
Mining
Food, Beverages and Tobacco
Textiles and Clothing
Leather and Shoes
Wood and Cork
Paper and Printing Industry
Refining of Petroleum
Chemicals and Rubber
Non-metallic Minerals
Metallurgical Industries and Metallic Products
Production of Machinery, Equipment and Electrical Devices
Production of Transport Material
Other Transforming Industries
Electricity, Gas and Water
Construction and Public Works
Wholesale and Retail Trade
Tourism
Transport and Communication
Financial Activities
Real Estate Activities
Services Provided to Companies
Public Administration and Services
Other activities of collective services
Mortgage Loans
Consumers Loans
Others
333 150
74 587
535 893
358 937
72 598
116 943
204 175
9 867
323 798
126 754
361 426
141 484
118 960
141 682
337 076
1 401 976
1 388 289
980 980
874 941
470 353
1 776 935
2 322 854
591 860
688 940
10 010 453
1 333 298
118 600
( 11 213)
( 18 626)
( 16 677)
( 15 812)
( 3 184)
( 3 946)
( 19 003)
( 14)
( 5 175)
( 7 884)
( 12 497)
( 9 161)
( 2 999)
( 11 021)
( 19 073)
( 166 456)
( 61 648)
( 80 486)
( 53 234)
( 61 084)
( 221 118)
( 305 367)
( 26 300)
( 143 175)
( 65 845)
( 188 910)
( 69 867)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
267 016
-
-
-
-
TOTAL
25 216 809
( 1 599 775)
267 016
690
-
10 113
255
-
236
27
-
1 576
-
281
349
78
-
22 809
97 763
3 741
362
67 527
163 798
8 147
9 034
-
1 471
-
-
-
388 257
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
882 971
-
75 613
-
2 378
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12 972
-
-
-
-
-
-
-
29 227
-
-
-
-
-
-
-
19 597
16 483
16 533
42 692
-
-
33 978
-
41 174
182
99 577
749 263
867
102 139
6 490 358
99 878
-
-
165 639
( 13)
-
-
-
-
-
-
-
( 13)
( 14)
( 10)
( 26)
-
-
( 25)
-
( 27)
-
( 63)
( 249)
-
( 53)
( 3 125)
( 58)
-
-
( 14)
19 196
18 380
73 076
1 197
-
12 512
31 483
40 135
131 643
3 441
1 498
45 059
15 039
4 987
138 950
199 316
45 435
-
11 639
369 587
100 777
705 450
421 249
42 264
-
-
-
( 26)
( 4)
( 2 277)
-
-
( 49)
( 48)
( 20)
( 67)
( 4)
( 21)
( 22)
( 8)
( 35)
( 418)
( 60 786)
( 51)
-
( 16)
( 938)
( 26 181)
( 109 627)
( 579)
( 60)
-
-
-
12 411
8 013
50 449
9 336
2 074
6 546
3 542
1 804
18 684
18 496
42 633
64 780
12 297
18 390
101 060
888 736
202 637
62 419
376 637
133 476
214 027
386 795
24 295
142 419
35
6 584
17 615
960 962
12 972
7 907 587
( 3 690)
2 432 313
( 201 237)
2 826 190
( 6 004)
( 193)
( 295)
( 2 608)
( 107)
( 46)
( 32)
-
( 122)
( 269)
( 384)
( 979)
( 638)
( 2 359)
( 194)
( 39 174)
( 2 177)
( 7 129)
( 1 794)
( 749)
( 21 151)
( 4 264)
( 191)
( 824)
-
-
( 480)
( 92 163)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 128 -
295
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Exposure to sovereign debt of “peripheral” Eurozone countries
Exposure to sovereign debt of “peripheral” Eurozone countries
As at 31 December 2021 and 2020, the Group’s exposure to sovereign debt of “peripheral” Eurozone countries, is presented as
As at 31 December 2021 and 2020, the Group’s exposure to sovereign debt of “peripheral” Eurozone
follows:
countries, is presented as follows:
31.12.2021
(in thousands of Euros)
Loans and
advances to
customers
Securities held
for trading
Derivative
instruments (1)
Securities at fair value
through other
comprehensive
income
Securities at
amortised cost
Total
557 419
-
-
-
114 465
-
-
-
557 419
114 465
-
-
-
-
-
2 564 587
1 619 260
171 608
148 601
376 792
-
-
-
3 613 263
1 619 260
171 608
148 601
4 504 056
376 792
5 552 732
31.12.2020
(in thousands of Euros)
Loans and
advances to
customers
Securities held
for trading
Derivative
instruments (1)
Securities at fair value
through other
comprehensive
income
Securities at
amortised cost
Total
591 859
-
-
-
267 016
-
-
-
591 859
267 016
( 16)
-
-
-
( 16)
2 780 473
2 039 075
237 844
134 238
420 670
-
-
-
4 060 002
2 039 075
237 844
134 238
5 191 630
420 670
6 471 159
Portugal
Spain
Ireland
Italy
(1) Net values: receivable / (payable)
Portugal
Spain
Ireland
Italy
(1) Net values: receivable / (payable)
Except for Loans and advances to customers, all the exposures presented above, except those relating to loans and advances to
customers, are recorded in the Group’s balance sheet at fair value, based on market quotations or, in the case derivatives, based on
valuation techniques using observable market parameters / prices.
Except for Loans and advances to customers, all the exposures presented above, except those relating
to loans and advances to customers, are recorded in the Group’s balance sheet at fair value, based on
market quotations or, in the case derivatives, based on valuation techniques using observable market
parameters / prices.
The details of the exposure regarding the securities are as follows:
31.12.2021
(in thousands of Euros)
The details of the exposure regarding the securities are as follows:
Nominal
Amount
Market
quotation
Accrued
interest
Carrying book
value
Impairment
Fair value
reserves
Securities at fair value through other comprehensive income
Portugal
Maturity up to 1 year
Maturity exceeding 1 year
Spain
Maturity up to 1 year
Maturity exceeding 1 year
Ireland
Maturity exceeding 1 year
Italy
Maturidade até 1 ano
Maturity exceeding 1 year
Securities at amortised cost
Portugal
Securities held for trading
Portugal
Maturity exceeding 1 year
2 298 790
412 050
1 886 740
1 529 200
755 000
774 200
153 600
153 600
148 561
-
148 561
2 538 669
419 341
2 119 328
1 594 096
758 261
835 835
170 350
170 350
148 286
-
148 286
25 918
1 582
24 336
25 164
17 334
7 830
1 258
1 258
315
-
315
2 564 587
420 923
2 143 664
1 619 260
775 595
843 665
171 608
171 608
148 601
-
148 601
4 130 151
4 451 401
52 655
4 504 056
106 500
106 500
114 017
114 017
448
448
114 465
114 465
-
-
-
-
-
-
-
-
-
-
-
-
-
-
86 185
2 994
83 191
46 283
1 729
44 554
13 457
13 457
215
-
215
146 140
-
-
-
-
-
375 646
375 646
375 646
425 189
425 189
1 689
1 689
425 189
1 689
376 792
376 792
376 792
543
543
543
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 128 -
296
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Exposure to sovereign debt of “peripheral” Eurozone countries
As at 31 December 2021 and 2020, the Group’s exposure to sovereign debt of “peripheral” Eurozone countries, is presented as
follows:
Portugal
Spain
Ireland
Italy
Portugal
Spain
Ireland
Italy
(1) Net values: receivable / (payable)
557 419
114 465
4 504 056
376 792
5 552 732
Loans and
advances to
customers
Securities held
Derivative
for trading
instruments (1)
through other
comprehensive
Securities at
amortised cost
Total
31.12.2021
Securities at fair value
557 419
114 465
376 792
-
-
-
-
-
-
-
-
-
-
-
-
income
2 564 587
1 619 260
171 608
148 601
income
2 780 473
2 039 075
237 844
134 238
-
-
-
-
-
-
-
-
Loans and
advances to
customers
Securities held
Derivative
for trading
instruments (1)
through other
Securities at
comprehensive
amortised cost
Total
31.12.2020
Securities at fair value
591 859
267 016
( 16)
420 670
(in thousands of Euros)
(in thousands of Euros)
3 613 263
1 619 260
171 608
148 601
4 060 002
2 039 075
237 844
134 238
-
-
-
-
-
-
(1) Net values: receivable / (payable)
591 859
267 016
( 16)
5 191 630
420 670
6 471 159
Except for Loans and advances to customers, all the exposures presented above, except those relating to loans and advances to
customers, are recorded in the Group’s balance sheet at fair value, based on market quotations or, in the case derivatives, based on
valuation techniques using observable market parameters / prices.
The details of the exposure regarding the securities are as follows:
Securities at fair value through other comprehensive income
Portugal
Maturity up to 1 year
Maturity exceeding 1 year
Spain
Maturity up to 1 year
Maturity exceeding 1 year
Ireland
Maturity exceeding 1 year
Italy
Maturidade até 1 ano
Maturity exceeding 1 year
Securities at amortised cost
Portugal
Securities held for trading
Portugal
Maturity exceeding 1 year
31.12.2021
Nominal
Amount
Market
quotation
Accrued
interest
Carrying book
value
Impairment
Fair value
reserves
(in thousands of Euros)
2 298 790
412 050
1 886 740
1 529 200
755 000
774 200
153 600
153 600
148 561
-
148 561
2 538 669
419 341
2 119 328
1 594 096
758 261
835 835
170 350
170 350
148 286
-
148 286
25 918
1 582
24 336
25 164
17 334
7 830
1 258
1 258
315
-
315
2 564 587
420 923
2 143 664
1 619 260
775 595
843 665
171 608
171 608
148 601
-
148 601
4 130 151
4 451 401
52 655
4 504 056
106 500
106 500
114 017
114 017
448
448
114 465
114 465
-
-
-
-
-
-
-
-
-
-
-
-
-
-
375 646
375 646
375 646
425 189
425 189
1 689
1 689
425 189
1 689
376 792
376 792
376 792
543
543
543
86 185
2 994
83 191
46 283
1 729
44 554
13 457
13 457
215
-
215
146 140
-
-
-
-
-
(in thousands of Euros)
Nominal
Amount
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Securities at fair value through other comprehensive income
31.12.2020
Market
quotation
Accrued
interest
Carrying book
value
Impairment
Portugal
Maturity up to 1 year
Maturity exceeding 1 year
Spain
Maturity exceeding 1 year
Ireland
Maturity exceeding 1 year
Italy
Maturity exceeding 1 year
Securities at amortised cost
Portugal
Securities held for trading
Portugal
Maturity exceeding 1 year
2 420 973
227 455
2 193 518
1 894 750
1 514 750
193 600
193 600
129 821
49 821
2 753 428
231 102
2 522 326
2 012 871
1 630 359
236 205
236 205
133 655
51 854
27 045
1 760
25 285
26 204
25 144
1 639
1 639
583
190
2 780 473
232 862
2 547 611
2 039 075
1 655 503
237 844
237 844
134 238
52 044
4 639 144
5 136 159
55 471
5 191 630
213 500
213 500
264 033
264 033
2 983
2 983
267 016
267 016
-
-
-
-
-
-
-
-
-
-
-
-
419 438
419 438
419 438
478 998
478 998
1 811
1 811
478 998
1 811
480 809
480 809
480 809
579
579
579
Fair value
reserves
- 128 -
129 520
798
128 722
75 509
74 029
39 340
39 340
4 177
2 561
248 546
-
-
-
-
-
44.3.8 Forborne modified loans
The Group proceeds to the identification and register of restructured credit contracts due to the client's financial difficulties whenever
there are changes to the terms and conditions of a contract in which the client has defaulted, that is, it is foreseeable that it will default,
with a financial obligation. It is considered that there is a change to the terms and conditions of the contract when (i) there are
contractual changes to the benefit of the customer, such as extending the term, introducing grace periods, reducing the rate or partial
debt forgiveness; (ii) there is a contracting of a new credit operation to settle the existing debt (total or partial); or (iii) the new terms
of the contract are more favorable than those applied to other customers with the same risk profile.
The cancellation of a restructured credit due to the client's financial difficulties can only occur after a minimum period of two years
from the date of the restructuring, provided that the following conditions are cumulatively fulfilled: (i) regular payment of capital and
interest; (ii) the customer has no capital or interest due; and (iii) there were no debt restructuring mechanisms by the client in that
period.
The amounts of the restructured loans due to financial difficulties of the customer as at 31 December 2021 and 2020, are as follows:
297
Corporate
Mortgage loans
Consumer and other loans
Total
(in thousands of Euros)
31.12.2021
31.12.2020
1 274 056
149 363
138 369
1 782 137
154 216
147 775
1 561 788
2 084 128
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 129 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Securities at fair value through other comprehensive income
Portugal
Maturity up to 1 year
Maturity exceeding 1 year
Maturity exceeding 1 year
Maturity exceeding 1 year
Spain
Ireland
Italy
Maturity exceeding 1 year
Securities at amortised cost
Portugal
Securities held for trading
Portugal
Maturity exceeding 1 year
44.3.8 Forborne modified loans
31.12.2020
Nominal
Amount
Market
quotation
Accrued
Carrying book
interest
value
Impairment
Fair value
reserves
(in thousands of Euros)
2 420 973
227 455
2 193 518
1 894 750
1 514 750
193 600
193 600
129 821
49 821
2 753 428
231 102
2 522 326
2 012 871
1 630 359
236 205
236 205
133 655
51 854
27 045
1 760
25 285
26 204
25 144
1 639
1 639
583
190
2 780 473
232 862
2 547 611
2 039 075
1 655 503
237 844
237 844
134 238
52 044
4 639 144
5 136 159
55 471
5 191 630
213 500
213 500
264 033
264 033
2 983
2 983
267 016
267 016
-
-
-
-
-
-
-
-
-
-
-
-
419 438
419 438
419 438
478 998
478 998
1 811
1 811
478 998
1 811
480 809
480 809
480 809
579
579
579
129 520
798
128 722
75 509
74 029
39 340
39 340
4 177
2 561
248 546
-
-
-
-
-
44.3.8 Forborne modified loans
The Group proceeds to the identification and register of restructured credit contracts due to the
client’s financial difficulties whenever there are changes to the terms and conditions of a contract in
which the client has defaulted, that is, it is foreseeable that it will default, with a financial obligation.
It is considered that there is a change to the terms and conditions of the contract when (i) there are
contractual changes to the benefit of the customer, such as extending the term, introducing grace
periods, reducing the rate or partial debt forgiveness; (ii) there is a contracting of a new credit operation
to settle the existing debt (total or partial); or (iii) the new terms of the contract are more favorable
than those applied to other customers with the same risk profile.
The Group proceeds to the identification and register of restructured credit contracts due to the client's financial difficul ties whenever
there are changes to the terms and conditions of a contract in which the client has defaulted, that is, it is foreseeable that it w ill default,
with a financial obligation. It is considered that there is a change to the terms and conditions of the contract when (i) there are
contractual changes to the benefit of the customer, such as extending the term, introducing grace periods, reducing the rate or partial
debt forgiveness; (ii) there is a contracting of a new credit operation to settle the existing debt (total or partial); or (iii) the new terms
of the contract are more favorable than those applied to other customers with the same risk profile.
The cancellation of a restructured credit due to the client’s financial difficulties can only occur after a
minimum period of two years from the date of the restructuring, provided that the following conditions
are cumulatively fulfilled: (i) regular payment of capital and interest; (ii) the customer has no capital or
interest due; and (iii) there were no debt restructuring mechanisms by the client in that period.
The cancellation of a restructured credit due to the client's financial difficulties can only occur after a minimum p eriod of two years
from the date of the restructuring, provided that the following conditions are cumulatively fulfilled: (i) regular payment of capital and
interest; (ii) the customer has no capital or interest due; and (iii) there were no debt restructuring mechanisms by the client in that
period.
The amounts of the restructured loans due to financial difficulties of the customer as at 31 December
2021 and 2020, are as follows:
The amounts of the restructured loans due to financial difficulties of the customer as at 31 December 2021 and 2020, are as follows:
Corporate
Mortgage loans
Consumer and other loans
Total
(in thousands of Euros)
31.12.2021
31.12.2020
1 274 056
149 363
138 369
1 782 137
154 216
147 775
1 561 788
2 084 128
The details of the restructuring measures applied to loans restructured up to 31 December 2021 and
2010 are the following:
The details of the restructuring measures applied to loans restructured up to 31 December 2021 and 2010 are the following:
Solution
Performing
31.12.2021
Non Performing
(in thousands of Euros)
Total
No.
Transaction
Exposure
Impairment
No.
Transaction
Exposure
Impairment
No. Transaction
Exposure
Impairment
Principal or interest forgiveness
Assets received in partial settlement of loan
Capitalization of interest
New loan in total or partial payment of existing loan
Extension of repayment period
Introduction of grace period of principal or interest
Decrease in the interest rates
Changes of the lease payment plan
Changes in the interest paymen
Other
Total
37
16
36
1 334
2 111
344
83
115
4
14 027
1 043
6 796
171 823
389 486
28 207
10 598
7 103
2 020
1 886
145
359
12 731
60 177
787
460
394
228
1 218
35 408
1 014
101
19
100
444
868
85
24
45
2
286
169 163
102 454
420
79 248
123 983
428 489
55 586
19 823
8 719
1 997
7 849
195
46 515
57 630
261 517
25 331
6 050
2 891
1 694
3 986
1 974
895 277
508 263
138
35
136
1 778
2 979
429
107
160
6
1 504
7 272
183 190
1 463
86 044
295 806
817 975
83 793
30 421
15 822
4 017
43 257
104 340
340
46 874
70 361
321 694
26 118
6 510
3 285
1 922
5 000
1 561 788
586 444
- 130 -
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5 298
666 511
78 181
Solution
Performing
31.12.2020
Non Performing
(in thousands of Euros)
Total
Principal or interest forgiveness
Assets received in partial settlement of loan
Capitalization of interest
New loan in total or partial payment of existing loan
Extension of repayment period
Introduction of grace period of principal or interest
Decrease in the interest rates
Changes of the lease payment plan
Changes in the interest paymen
Other
Total
No.
Transaction
Exposure
Impairment
No.
Transaction
Exposure
Impairment
No. Transaction
Exposure
Impairment
43
20
44
1 483
2 063
339
101
122
5
57 740
1 104
12 994
90 212
514 009
33 881
13 859
9 698
20
1 409
47 127
3 921
159
1 002
10 130
81 700
1 504
466
787
1
1 304
150
22
181
575
921
111
30
72
2
656
177 807
107 513
2 078
123 462
231 373
590 946
60 421
65 171
39 634
2 769
9 823
1 924
74 085
145 655
382 265
28 147
23 549
21 771
2 380
1 159
193
42
225
235 547
3 182
136 456
2 058
321 585
2 984
1 104 955
450
131
194
7
2 065
94 302
79 030
49 332
2 789
56 950
111 434
2 083
75 087
155 785
463 965
29 651
24 015
22 558
2 381
2 463
5 629
780 644
100 974
2 720
1 303 484
788 448
8 349
2 084 128
889 422
The movement of restructured loans throughout the years 2021 and 2020 was as follows:
298
Opening balance
Restructured loans in the period
Loans reclassified to "normal"
Loans written off
Others
Total
44.3.9 Moratorium
(in thousands of Euros)
31.12.2021
31.12.2020
2 084 128
272 250
( 186 700)
( 179 239)
( 564 799)
2 729 602
402 874
( 101 157)
( 300 821)
( 646 370)
1 425 640
2 084 128
Following the recommendations of the European Banking Authority and according with Instruction no. 19/2020 on the reporting and
disclosure of information on exposures subject to measures applied in response to the Covid-19 crisis as per EBA (EBA/GL/2020/07),
we present below the following details referring to default and loans granted under the new public guarantee plans, which are fully
applicable to the consolidation perimeters of Nani Holdings, SGPS; SA and LSF Nani Investments S.à.r.l:
Information on loans and advances subject to legislative and non-legislative moratorium
Gross carrying amount
Accumulated impairment, accumulated negative changes in fair value resulting from credit risk
Productive
Non-productive
Of which:
instruments with a
Of which:
significant increase in
exposures subject to
credit risk since initial
restructuring measures
recognition but
without credit
impairment (Stage 2)
Of which:
exposures
subject to
Of which:
Reduced probability of
Of which:
payment that are not
exposures subject to
restructuring
past due or past due
restructuring measures
measures
for <= 90 days
Of which:
Reduced
probability of
payment that
are not past
due or past
due for <= 90
days
Of which:
exposures
subject to
restructurin
g measures
Of which:
instruments
with a
significant
increase in
credit risk
since initial
recognition
but without
credit
Non-productive
Of which:
Reduced
Of which:
Reduced
probability
Of which:
probability
of payment
exposures subject to
of payment
that has not
restructuring
that are not
been due or
measures
past due or
has been
past due for
due for a
<= 90 days
long time <=
90 dias
Of which:
exposures
subject to
Of which:
Reduced
probability of
payment that
Entries to
non-
productive
exhibitions
restructuring
are not past
measures
due or past due
for <= 90 days
33 662
6 748
6 725
26 897
26 233
17 875
189
169
169
20
20
0
23 122
3 944
3 928
17 683
15 582
8 508
45 756
904
904
44 852
36 278
24 437
783
520
520
264
264
0
21 491
27 561
-26 267
-1 179
-564
-25 089
-11 099
-15 508
45 756
6
6
788
788
-200
-197
-96
-93
21 485
18 198
-21 325
-1 026
18 634
6 423
-13 212
-652
-768
-44
-43
-724
-720
-513
-2
-1
-1
-1
-1
0
-87
-86
-104
-104
-426
-123
-20 299
-12 560
-192
-59
-59
-133
-133
0
-1
-1
-87
-87
-11 098
-10 735
-9 787
-3 006
125
125
215
0
21 485
26 773
-26 066
-1 081
-476
-24 985
-11 098
-15 422
44 852
(in thousands of Euros)
Gross
carrying
amount
Loans and advances subject to
a moratorium
of which: private
of which: secured by
residential properties
of which: non-financial
corporations
of which: small and medium-
sized enterprises
of which: secured by
commercial real estate
116 696
70 940
13 495
12 591
13 141
12 237
101 688
56 836
88 275
51 998
54 900
30 463
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 130 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The details of the restructuring measures applied to loans restructured up to 31 December 2021 and 2010 are the following:
The details of the restructuring measures applied to loans restructured up to 31 December 2021 and 2010 are the following:
Non Performing
Performing
Total
Solution
The details of the restructuring measures applied to loans restructured up to 31 December 2021 and 2010 are the following:
Transaction
Transaction
No. Transaction
Exposure
Impairment
Impairment
Exposure
Exposure
(in thousands of Euros)
Impairment
Principal or interest forgiveness
Assets received in partial settlement of loan
Solution
Capitalization of interest
New loan in total or partial payment of existing loan
Solution
Principal or interest forgiveness
Extension of repayment period
Assets received in partial settlement of loan
Introduction of grace period of principal or interest
Capitalization of interest
Principal or interest forgiveness
Decrease in the interest rates
New loan in total or partial payment of existing loan
No.
37
16
No.
36
Transaction
1 334
No.
37
2 111
Transaction
16
344
36
37
83
1 334
(in thousands of Euros)
31.12.2021
No.
101
19
31.12.2021
169 163
Non Performing
420
31.12.2021
102 454
195
138
183 190
104 340
Total
35
(in thousands of Euros)
1 463
340
No.
Transaction
Transaction
444
No.
101
868
19
85
100
101
24
444
100
Exposure
79 248
Impairment
46 515
No. Transaction
136
Exposure
86 044
Impairment
46 874
Non Performing
123 983
57 630
169 163
Exposure
428 489
102 454
Impairment
261 517
No. Transaction
420
55 586
79 248
169 163
19 823
123 983
195
25 331
46 515
102 454
57 630
6 050
Total
1 778
295 806
70 361
138
35
183 190
Exposure
2 979
1 463
429
136
138
86 044
183 190
817 975
Impairment
321 694
83 793
26 118
104 340
340
46 874
104 340
70 361
1 778
107
295 806
30 421
14 027
Performing
1 043
Exposure
6 796
Performing
171 823
14 027
Exposure
389 486
1 043
28 207
6 796
14 027
10 598
171 823
1 043
7 103
389 486
6 796
2 020
28 207
171 823
35 408
10 598
389 486
7 103
28 207
2 020
10 598
35 408
7 103
666 511
115
16
2 111
36
4
344
1 334
83
2 111
115
344
4
83
1 218
115
1 218
5 298
4
5 298
1 218
2 020
666 511
35 408
5 298
Performing
666 511
1 886
145
Impairment
359
12 731
1 886
Impairment
60 177
145
787
359
1 886
460
12 731
145
394
60 177
359
228
787
12 731
1 014
460
60 177
394
787
78 181
228
460
1 014
394
228
78 181
1 014
78 181
No.
Transaction
Exposure
Impairment
43
No.
Transaction
20
43
No.
44
Transaction
1 483
20
2 063
339
101
122
44
43
1 483
20
2 063
44
339
1 483
101
2 063
5
122
339
5
101
1 409
122
1 409
5 629
Performing
57 740
Exposure
Performing
1 104
57 740
12 994
Exposure
90 212
1 104
514 009
12 994
57 740
90 212
1 104
33 881
514 009
12 994
13 859
33 881
90 212
9 698
13 859
514 009
20
9 698
33 881
20
13 859
47 127
9 698
47 127
780 644
159
3 921
1 002
159
10 130
1 002
3 921
81 700
10 130
159
1 504
81 700
1 002
466
1 504
10 130
787
466
81 700
1
787
1 504
1 304
1
466
1 304
787
100 974
1
100 974
1 304
2
45
19
868
100
85
444
286
24
868
45
85
1 974
2
24
286
45
1 997
8 719
420
428 489
79 248
55 586
123 983
19 823
428 489
8 719
55 586
895 277
1 997
19 823
7 849
8 719
7 849
2 891
1 694
3 986
195
261 517
46 515
25 331
57 630
6 050
261 517
2 891
25 331
1 694
6 050
3 986
2 891
508 263
7 272
1 561 788
586 444
2
1 974
286
1 974
No.
Transaction
1 997
895 277
31.12.2020
7 849
Non Performing
895 277
31.12.2020
Exposure
Non Performing
1 694
508 263
3 986
508 263
6
7 272
1 504
7 272
Impairment
No. Transaction
Exposure
Impairment
Total
(in thousands of Euros)
3 921
Impairment
No.
Transaction
150
31.12.2020
177 807
Exposure
Non Performing
2 078
22
107 513
1 924
Impairment
No. Transaction
193
Exposure
Total
42
235 547
Impairment
3 182
Impairment
150
No.
Transaction
181
22
575
Exposure
177 807
123 462
2 078
231 373
107 513
74 085
Impairment
1 924
145 655
193
No. Transaction
42
225
235 547
Exposure
136 456
Impairment
111 434
2 058
3 182
321 585
2 083
155 785
6 510
3 285
1 922
5 000
15 822
4 017
43 257
35
2 979
136
429
1 778
107
2 979
160
429
6
107
1 504
160
160
6
1 504
1 463
817 975
86 044
83 793
295 806
30 421
817 975
15 822
83 793
4 017
30 421
43 257
15 822
4 017
1 561 788
43 257
340
321 694
46 874
26 118
70 361
6 510
321 694
3 285
26 118
1 922
6 510
5 000
3 285
1 922
586 444
5 000
Total
1 561 788
(in thousands of Euros)
586 444
(in thousands of Euros)
111 434
2 083
75 087
29 651
24 015
22 558
2 381
2 463
1 104 955
463 965
2 984
225
193
2 058
42
2 984
225
450
2 058
131
2 984
194
450
7
131
2 065
194
450
131
194
136 456
235 547
321 585
3 182
1 104 955
136 456
94 302
321 585
79 030
1 104 955
7
49 332
94 302
2 789
79 030
56 950
49 332
2 065
8 349
94 302
79 030
49 332
2 789
56 950
75 087
111 434
155 785
2 083
463 965
75 087
29 651
155 785
24 015
463 965
22 558
29 651
2 381
24 015
2 463
22 558
30
72
181
150
921
575
22
111
921
181
111
575
30
921
72
111
656
2
30
656
72
2 720
2
2 720
656
2
65 171
60 421
39 634
123 462
177 807
590 946
231 373
2 078
590 946
123 462
60 421
231 373
65 171
590 946
39 634
60 421
2 769
65 171
9 823
39 634
1 303 484
2 769
1 303 484
9 823
9 823
2 769
382 265
74 085
107 513
145 655
1 924
382 265
74 085
28 147
145 655
23 549
382 265
21 771
28 147
2 380
23 549
1 159
21 771
28 147
23 549
21 771
2 380
1 159
788 448
Changes of the lease payment plan
Changes in the interest paymen
Assets received in partial settlement of loan
Extension of repayment period
Capitalization of interest
Introduction of grace period of principal or interest
New loan in total or partial payment of existing loan
Decrease in the interest rates
Extension of repayment period
Changes of the lease payment plan
Introduction of grace period of principal or interest
Changes in the interest paymen
Decrease in the interest rates
Other
Changes of the lease payment plan
Other
Total
Changes in the interest paymen
Total
Other
Total
Solution
Solution
Principal or interest forgiveness
Assets received in partial settlement of loan
Solution
Capitalization of interest
Principal or interest forgiveness
New loan in total or partial payment of existing loan
Assets received in partial settlement of loan
Decrease in the interest rates
Extension of repayment period
Introduction of grace period of principal or interest
Capitalization of interest
Principal or interest forgiveness
New loan in total or partial payment of existing loan
Assets received in partial settlement of loan
Extension of repayment period
Capitalization of interest
Introduction of grace period of principal or interest
New loan in total or partial payment of existing loan
Decrease in the interest rates
Extension of repayment period
Changes of the lease payment plan
Introduction of grace period of principal or interest
Changes in the interest paymen
Decrease in the interest rates
Other
Changes of the lease payment plan
Changes of the lease payment plan
Changes in the interest paymen
Other
Total
Changes in the interest paymen
Total
Other
5
5 629
1 409
20
780 644
47 127
2 380
788 448
1 159
7
8 349
2 065
2 789
2 084 128
56 950
2 381
889 422
2 463
2 084 128
889 422
The movement of restructured loans throughout the years 2021 and 2020 was as follows:
Total
The movement of restructured loans throughout the years 2021 and 2020 was as follows:
1 303 484
780 644
100 974
2 720
5 629
788 448
The movement of restructured loans throughout the years 2021 and 2020 was as follows:
The movement of restructured loans throughout the years 2021 and 2020 was as follows:
Opening balance
Opening balance
Restructured loans in the period
Restructured loans in the period
Opening balance
Loans reclassified to "normal"
Loans reclassified to "normal"
Restructured loans in the period
Loans written off
Loans written off
Loans reclassified to "normal"
Others
Others
Loans written off
Total
Others
Total
Total
44.3.9 Moratorium
44.3.9 Moratorium
31.12.2021
31.12.2021
31.12.2021
8 349
2 084 128
889 422
(in thousands of Euros)
(in thousands of Euros)
31.12.2020
31.12.2020
31.12.2020
(in thousands of Euros)
2 729 602
402 874
2 729 602
( 101 157)
402 874
( 300 821)
( 101 157)
( 646 370)
( 300 821)
2 084 128
( 646 370)
2 084 128
272 250
( 186 700)
( 179 239)
( 564 799)
2 084 128
272 250
2 084 128
( 186 700)
272 250
( 179 239)
( 186 700)
( 564 799)
( 179 239)
1 425 640
( 428 651)
1 425 640
2 729 602
402 874
( 101 157)
( 300 821)
( 646 370)
2 084 128
1 561 788
2 084 128
44.3.9 Moratorium
Following the recommendations of the European Banking Authority and according with Instruction no. 19/2020 on the reporting and
44.3.9 Moratorium
Following the recommendations of the European Banking Authority and according with Instruction no. 19/2020 on the reporting and
disclosure of information on exposures subject to measures applied in response to the Covid-19 crisis as per EBA (EBA/GL/2020/07),
Following the recommendations of the European Banking Authority and according with Instruction no. 19/2020 on the reporting and
disclosure of information on exposures subject to measures applied in response to the Covid-19 crisis as per EBA (EBA/GL/2020/07),
we present below the following details referring to default and loans granted under the new public guarantee plans, which are fully
disclosure of information on exposures subject to measures applied in response to the Covid-19 crisis as per EBA (EBA/GL/2020/07),
we present below the following details referring to default and loans granted under the new public guarantee plans, which are fully
applicable to the consolidation perimeters of Nani Holdings, SGPS; SA and LSF Nani Investments S.à.r.l:
we present below the following details referring to default and loans granted under the new public guarantee plans, which are fully
applicable to the consolidation perimeters of Nani Holdings, SGPS; SA and LSF Nani Investments S.à.r.l:
applicable to the consolidation perimeters of Nani Holdings, SGPS; SA and LSF Nani Investments S.à.r.l:
Information on loans and advances subject to legislative and non-legislative moratorium
referring to default and loans granted under the new public guarantee plans, which are fully applicable
to the consolidation perimeters of Nani Holdings, SGPS; SA and LSF Nani Investments S.à.r.l:
Information on loans and advances subject to legislative and non-legislative moratorium
Following the recommendations of the European Banking Authority and according with Instruction no.
19/2020 on the reporting and disclosure of information on exposures subject to measures applied in
response to the Covid-19 crisis as per EBA (EBA/GL/2020/07), we present below the following details
Information on loans and advances subject to legislative and non-legislative moratorium
Information on loans and advances subject to legislative and non-legislative moratorium
Gross carrying amount
Accumulated impairment, accumulated negative changes in fair value resulting from credit risk
(in thousands of Euros)
Gross
carrying
amount
(in thousands of Euros)
(in thousands of Euros)
Productive
Non-productive
Non-productive
Gross carrying amount
Gross carrying amount
Productive
Productive
Of which:
exposures subject to
restructuring measures
Of which:
instruments with a
significant increase in
credit risk since initial
recognition but
Of which:
without credit
instruments with a
impairment (Stage 2)
significant increase in
credit risk since initial
recognition but
without credit
impairment (Stage 2)
189
169
Of which:
exposures subject to
restructuring measures
70 940
Of which:
instruments with a
Of which:
significant increase in
exposures subject to
credit risk since initial
restructuring measures
33 662
recognition but
without credit
6 748
impairment (Stage 2)
Of which:
exposures
subject to
restructuring
measures
Of which:
exposures
subject to
restructuring
measures
Of which:
exposures
subject to
restructuring
measures
Of which:
Non-productive
Non-productive
Reduced probability of
payment that are not
past due or past due
for <= 90 days
Of which:
Of which:
Reduced probability of
Reduced probability of
payment that are not
payment that are not
past due or past due
783
past due or past due
for <= 90 days
for <= 90 days
45 756
904
520
23 122
3 944
Loans and advances subject to
a moratorium
116 696
of which: private
13 495
12 591
of which: secured by
Loans and advances subject to
residential properties
Loans and advances subject to
a moratorium
of which: non-financial
a moratorium
corporations
of which: private
116 696
of which: private
of which: secured by
residential properties
of which: non-financial
corporations
of which: small and medium-
13 495
of which: secured by
sized enterprises
residential properties
of which: secured by
of which: non-financial
commercial real estate
corporations
13 141
101 688
of which: small and medium-
sized enterprises
of which: secured by
commercial real estate
88 275
of which: small and medium-
sized enterprises
of which: secured by
commercial real estate
13 141
116 696
70 940
101 688
13 495
12 591
88 275
13 141
12 237
54 900
101 688
56 836
88 275
51 998
54 900
12 237
70 940
56 836
12 591
51 998
12 237
30 463
56 836
51 998
30 463
6 725
33 662
26 897
6 748
26 233
6 725
17 875
26 897
26 233
17 875
33 662
6 748
6 725
26 897
26 233
17 875
169
189
20
169
20
169
0
20
20
0
189
169
169
20
20
0
3 928
23 122
23 122
17 683
3 944
3 944
15 582
3 928
3 928
8 508
17 683
17 683
15 582
904
45 756
45 756
44 852
904
904
36 278
904
904
24 437
44 852
44 852
36 278
15 582
8 508
36 278
24 437
8 508
24 437
520
783
783
264
520
520
264
520
520
0
264
264
264
264
0
0
54 900
30 463
Of which:
Reduced
probability of
payment that
are not past
Of which:
Of which:
due or past
Reduced
Reduced
due for <= 90
probability of
probability of
days
payment that
payment that
are not past
are not past
27 561
due or past
due or past
due for <= 90
due for <= 90
788
days
days
-26 267
-200
Of which:
exposures
subject to
restructurin
g measures
Of which:
Of which:
exposures
exposures
subject to
subject to
restructurin
-1 179
restructurin
g measures
g measures
-96
Accumulated impairment, accumulated negative changes in fair value resulting from credit risk
Of which:
exposures subject to
restructuring
measures
Of which:
Accumulated impairment, accumulated negative changes in fair value resulting from credit risk
instruments
with a
significant
increase in
Of which:
credit risk
instruments
since initial
with a
recognition
significant
but without
increase in
credit
credit risk
-768
since initial
recognition
-44
but without
credit
Of which:
Reduced
probability
Non-productive
of payment
that has not
Of which:
been due or
Of which:
Reduced
has been
Reduced
probability
due for a
of payment
probability
long time <=
that has not
of payment
90 dias
been due or
that are not
-192
has been
past due or
due for a
past due for
-59
long time <=
<= 90 days
90 dias
Of which:
Reduced
probability
Non-productive
of payment
that are not
Of which:
past due or
Reduced
past due for
probability
<= 90 days
of payment
that are not
-25 089
past due or
past due for
-104
<= 90 days
Of which:
exposures
Of which:
subject to
Reduced
restructuring
measures
probability
Of which:
of payment
exposures
that has not
subject to
been due or
restructuring
-11 099
has been
measures
due for a
long time <=
90 dias
Of which:
exposures subject to
restructuring
-564
measures
Of which:
instruments
with a
significant
increase in
credit risk
since initial
recognition
but without
credit
-43
-768
Of which:
exposures subject to
restructuring
measures
Of which:
Reduced
probability of
payment that
are not past
Of which:
due or past due
Reduced
Of which:
for <= 90 days
probability of
exposures
payment that
subject to
are not past
-15 508
restructuring
due or past due
measures
for <= 90 days
-87
-93
-1 179
-86
-564
-59
-192
-1
-2
-87
-2
-1
-1
Gross
carrying
amount
Entries to
non-
productive
exhibitions
Of which:
Entries to
Reduced
non-
probability of
productive
payment that
exhibitions
45 756
are not past
due or past due
for <= 90 days
125
788
27 561
27 561
26 773
788
788
18 198
788
788
6 423
26 773
-197
-26 267
-26 267
-26 066
-200
-200
-21 325
-197
-13 212
-26 066
-197
-1 179
-1 081
-96
-1 026
-93
-652
-1 081
-96
-93
26 773
18 198
-26 066
-21 325
-1 081
-1 026
18 198
6 423
-21 325
-13 212
-1 026
-652
6 423
-13 212
-652
-724
-44
-720
-43
-513
-724
-720
-513
-768
-44
-43
-724
-720
-513
-1
-1
-1
-1
0
-1
-1
0
-2
-1
-1
-1
-1
0
-476
-87
-426
-86
-123
-476
-426
-123
-104
-25 089
-564
-24 985
-104
-87
-20 299
-104
-86
-12 560
-24 985
-476
-20 299
-25 089
-133
-59
-104
-133
-59
-104
0
-133
-24 985
-133
-1
-11 099
-192
-11 098
-1
-59
-11 098
-1
-59
-9 787
-11 098
-133
-11 098
-87
-15 508
-11 099
-15 422
-87
-1
-10 735
-87
-1
-3 006
-15 422
-11 098
-10 735
-426
-12 560
-20 299
0
-133
-9 787
-11 098
-3 006
-123
-12 560
0
-9 787
125
45 756
-15 508
44 852
125
-87
215
125
-87
0
44 852
-15 422
215
-10 735
0
-3 006
45 756
125
125
44 852
215
0
Gross
carrying
amount
Entries to
non-
productive
exhibitions
Of which:
exposures subject to
restructuring measures
Of which:
Of which:
exposures subject to
exposures subject to
restructuring measures
restructuring measures
21 491
6
6
21 491
21 491
21 485
6
6
21 485
6
6
18 634
21 485
21 485
21 485
21 485
18 634
18 634
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 130 -
- 131 -
- 130 -
299
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Breakdown of loans and advances subject to legislative and non-legislative moratoria by residual term of the moratorium
Breakdown of loans and advances subject to legislative and non-legislative moratoria by
residual term of the moratorium
Breakdown of loans and advances subject to legislative and non-legislative moratoria by residual term of the moratorium
(in thousands of Euros)
Gross carrying amount
(in thousands of Euros)
Number of
debtors
Number of
debtors
Loans and advances that have been offered a moratorium
Loans and advances that have been offered a moratorium
Loans and advances subject to a moratorium (applied)
Loans and advances subject to a moratorium (applied)
40 222
40 222
40 222
40 222
of which: households
of which: households
of which: secured by residential properties
of which: secured by residential properties
6 853 599
6 853 599
6 853 599
6 853 599
2 158 877
2 158 877
1 972 552
1 972 552
of which: non-financial corporations
of which: non-financial corporations
of which: small and medium-sized enterprises
of which: secured by commercial real estate
of which: small and medium-sized enterprises
4 672 019
4 672 019
3 170 522
3 170 522
1 438 534
of which: secured by commercial real estate
1 438 534
Of which:
legislative
Of which:
legislative
moratoriums
moratoriums
5 537 108
5 537 108
1 498 128
1 498 128
1 459 404
1 459 404
4 016 297
4 016 297
2 665 001
2 665 001
1 420 647
1 420 647
Gross carrying amount
Residual deadline for default
Of which:
expired
Of which:
expired
Residual deadline for default
<= 3 months
<= 3 months
> 3 months
<= 6 months
> 6 months
<= 9 months
> 6 months
<= 9 months
> 9 months
<= 12 months
> 3 months
<= 6 months
> 9 months
<= 12 months
> 1 year
> 1 year
> 1 year
> 1 year
112 708 6 736 902
112 708 6 736 902
82 572
13 495 2 145 382
13 495 2 145 382
13 495
13 141 1 959 411
13 141 1 959 411
13 141
82 572
8 617
13 495
13 141
0
0
97 700 4 570 331
97 700 4 570 331
84 787 3 082 247
84 787 3 082 247
54 900 1 383 634
67 564
55 160
37 999
67 564
8 617
8 617
55 160
0
54 900 1 383 634
37 999
8 617
20 695
0
0
0
0
20 695
8 617
8 617
20 695
16 901
0
20 695
707
0
0
0
0
707
20 695
707
20 695
0
16 901
4 105
0
0
4 105
3 097
0
707
4 105
0
0
707
707
0
0
0
4 105
3 097
0
Information on new loans and advances granted under new public guarantee systems
introduced in response to the COVID-19 crisis
Information on new loans and advances granted under new public guarantee systems introduced in response to the COVID-
19 crisis
Information on new loans and advances granted under new public guarantee systems introduced in response to the COVID-
19 crisis
(in thousands of Euros)
Gross carrying amount
Accumulated impairment, accumulated negative fair value changes resulting from credit risk
Productive
Non Productive
Productive
Non Productive
Maximum
amount of
collateral
that can be
taken into
account
Gross carrying amount
Accumulated impairment, accumulated negative fair value changes resulting from credit risk
of which:
restructured
Productive
of which:
instruments with
significant increase in
credit risk since initial
recognition but no
credit impairment
(Stage 2)
of which:
restructured
Non Productive
of which:
reduced probability of
payment that are not
due or are past due
<= 90 days
of which:
restructured
of which:
instruments with
significant increase in
credit risk since initial
recognition but no
credit impairment
(Stage 2)
Productive
of which:
restructured
of which:
reduced probability of
payment that are not
Non Productive
due or are past due
<= 90 days
Public
guarantees
received
Gross
carrying
amount
Maximum
amount of
Inflows for
collateral
new
that can be
financing
taken into
account
Entries
for non-
productive
exhibits
New loans and advances subject to public
guarantee systems
of which: households
1 207 910
1 196 511
of which:
restructured
0
0
of which: secured by residential properties
0
0
of which:
instruments with
0
significant increase in
credit risk since initial
recognition but no
credit impairment
(Stage 2)
279 428
11 400
of which:
restructured
0
0
of which:
100
reduced probability of
payment that are not
due or are past due
<= 90 days
8 818
-8 897
-6 322
0
0
0
0
0
of which:
restructured
of which:
instruments with
-5 008
-2 575
significant increase in
credit risk since initial
recognition but no
credit impairment
(Stage 2)
0
0
-5
-2 072
of which:
restructured
of which:
997 305
reduced probability of
payment that are not
due or are past due
<= 90 days
11 400
Public
0
guarantees
received
0
0
(in thousands of Euros)
Gross
carrying
amount
Entries
for non-
productive
exhibits
Inflows for
new
financing
New loans and advances subject to public
guarantee systems
of which: non-financial corporations
1 207 910
1 196 511
1 206 081
0
1 194 682
279 428
0
279 428
11 400
11 400
100
100
8 818
8 818
-8 897
-8 896
-6 321
-6 322
0
0
-5 008
-5 008
-2 575
-2 575
-5
-5
-2 072
995 792
-2 072
11 400
997 305
0
11 400
of which: households
of which: small and medium-sized
enterprises
0
of which: secured by residential properties
of which: secured by commercial real
estate
0
1 009 028
0
1 003 648
2 018
0
2 018
5 380
0
0
0
-6 280
-28
0
0
-4 685
-28
0
0
-1 595
0
0
0
5 380
0
0
0
of which: non-financial corporations
1 206 081
1 194 682
0
279 428
11 400
100
8 818
-8 896
-6 321
0
-5 008
-2 575
-5
-2 072
995 792
11 400
0
0
of which: small and medium-sized
enterprises
44.4 Market risk
1 009 028
1 003 648
of which: secured by commercial real
estate
2 018
2 018
5 380
0
-6 280
-4 685
-28
-28
-1 595
0
5 380
0
Market Risk represents the potential loss resulting from an adverse change in the value of a financial instrument due to fluctuations
in interest rates, foreign exchange rates, equity prices, commodity prices, volatility and credit spread.
44.4 Market risk
44.4 Market risk
Market risk management is integrated with the balance sheet management through the CALCO (Capital Asset and Liability
Committee) structure, being this risk monitored by the Risk Committee.
Market Risk represents the potential loss resulting from an adverse change in the value of a financial
instrument due to fluctuations in interest rates, foreign exchange rates, equity prices, commodity
prices, volatility and credit spread.
Market Risk represents the potential loss resulting from an adverse change in the value of a financial instrument due to fluctuations
The main measurement of market risk is the assessment of potential losses under adverse market conditions, for which the Value at
in interest rates, foreign exchange rates, equity prices, commodity prices, volatility and credit spread.
Risk (VaR) methodology is used. novobanco Group’s VaR model uses the Monte Carlo simulation, based on a confidence level of
99% and an investment period of 10 days. Volatilities and correlations are historical, based on an observation period of one year. As
Market risk management is integrated with the balance sheet management through the CALCO (Capital Asset and Liability
a complement to VaR, stress testing scenarios have been developed, which allow for the evaluation of the impact of losses potentially
higher than those considered by the VaR measurement.
Committee) structure, being this risk monitored by the Risk Committee.
The main measurement of market risk is the assessment of potential losses under adverse market
conditions, for which the Value at Risk (VaR) methodology is used. novobanco Group’s VaR model uses
the Monte Carlo simulation, based on a confidence level of 99% and an investment period of 10 days.
Volatilities and correlations are historical, based on an observation period of one year. As a complement
to VaR, stress testing scenarios have been developed, which allow for the evaluation of the impact of
losses potentially higher than those considered by the VaR measurement.
Market risk management is integrated with the balance sheet management through the CALCO
(Capital Asset and Liability Committee) structure, being this risk monitored by the Risk Committee.
300
December
31.12.2021
31.12.2020
(in thousands of Euros)
757
14 433
6 215
70 332
2 494
31 454
826
10 628
1 983
24 522
2 187
35 495
915
14 433
Exchange risk
Interest rate risk
Annual average Maximum Minimum
Annual average Maximum Minimum December
The main measurement of market risk is the assessment of potential losses under adverse market conditions, for which the Value at
Risk (VaR) methodology is used. novobanco Group’s VaR model uses the Monte Carlo simulation, based on a confidence level of
99% and an investment period of 10 days. Volatilities and correlations are historical, based on an observation period of one year. As
a complement to VaR, stress testing scenarios have been developed, which allow for the evaluation of the impact of losses potentially
3 451
41 240
higher than those considered by the VaR measurement.
Shares and commodities
Volatility
Credit spread
Diversification effect
Total
3
0
719
( 4 314)
30 356
33
66
1 329
( 3 014)
225
422
4 146
( 7 004)
0
0
579
1 388
183
37
2 652
( 2 411)
192
139
5 051
( 5 289)
378
523
12 960
( 14 596)
80
37
1 640
( 1 138)
24 919
31.12.2021
42 480
13 421
15 809
37 775
75 812
31.12.2020
15 809
(in thousands of Euros)
Exchange risk
Interest rate risk
Volatility
novobanco Group has a VaR of Euro 30,356 thousand (31 December 2020: Euro 15,809 thousand) in respect of its trading positions.
The decrease is mainly explained by the decrease in the position in derivatives to hedge interest rate risk in the banking portfolio.
December
Annual average Maximum Minimum December
Annual average Maximum Minimum
2 494
31 454
3
0
1 983
24 522
33
66
3 451
41 240
225
422
826
10 628
0
0
915
14 433
183
37
2 187
35 495
192
139
6 215
70 332
378
523
Shares and commodities
44.4.1. Interest Rate Risk
Credit spread
In accordance with the recommendations of European Banking Authority presented in the document EBA/GL/2018/02, novobanco
12 960
1 329
4 146
2 652
5 051
719
579
Diversification effect
Group calculates the exposure to its balance sheet interest rate risk based on the prescribed shocks, classifying all notional amounts
( 5 289)
( 14 596)
( 4 314)
( 3 014)
( 7 004)
( 2 411)
1 388
of assets, liabilities and off-balance sheet captions which are sensitive to interest rate and are not part of the trading portfolio, by re-
Total
pricing intervals.
30 356
24 919
42 480
13 421
15 809
37 775
75 812
15 809
757
14 433
80
37
1 640
( 1 138)
novobanco Group has a VaR of Euro 30,356 thousand (31 December 2020: Euro 15,809 thousand) in respect of its trading positions.
The decrease is mainly explained by the decrease in the position in derivatives to hedge interest rate risk in the banking portfolio.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 131 -
44.4.1. Interest Rate Risk
In accordance with the recommendations of European Banking Authority presented in the document EBA/GL/2018/02, novobanco
Group calculates the exposure to its balance sheet interest rate risk based on the prescribed shocks, classifying all notional amounts
of assets, liabilities and off-balance sheet captions which are sensitive to interest rate and are not part of the trading portfolio, by re-
pricing intervals.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 131 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Breakdown of loans and advances subject to legislative and non-legislative moratoria by residual term of the moratorium
Gross carrying amount
(in thousands of Euros)
Number of
debtors
Of which:
legislative
moratoriums
Of which:
expired
Residual deadline for default
<= 3 months
> 3 months
> 6 months
> 9 months
<= 6 months
<= 9 months
<= 12 months
> 1 year
> 1 year
6 853 599
6 853 599
2 158 877
1 972 552
4 672 019
3 170 522
1 438 534
5 537 108
1 498 128
1 459 404
4 016 297
2 665 001
1 420 647
112 708 6 736 902
13 495 2 145 382
13 141 1 959 411
97 700 4 570 331
84 787 3 082 247
54 900 1 383 634
82 572
13 495
13 141
67 564
55 160
37 999
8 617
20 695
707
4 105
0
0
0
8 617
8 617
0
0
20 695
20 695
16 901
0
0
707
707
0
0
0
0
4 105
3 097
Loans and advances that have been offered a moratorium
Loans and advances subject to a moratorium (applied)
40 222
40 222
of which: households
of which: secured by residential properties
of which: non-financial corporations
of which: small and medium-sized enterprises
of which: secured by commercial real estate
19 crisis
Information on new loans and advances granted under new public guarantee systems introduced in response to the COVID-
Gross carrying amount
Accumulated impairment, accumulated negative fair value changes resulting from credit risk
Productive
Non Productive
Productive
Non Productive
of which:
restructured
of which:
instruments with
significant increase in
credit risk since initial
recognition but no
credit impairment
(Stage 2)
of which:
restructured
of which:
reduced probability of
payment that are not
due or are past due
<= 90 days
of which:
restructured
of which:
instruments with
significant increase in
credit risk since initial
recognition but no
credit impairment
(Stage 2)
of which:
restructured
of which:
reduced probability of
payment that are not
due or are past due
<= 90 days
Public
guarantees
received
Entries
for non-
productive
exhibits
1 207 910
1 196 511
279 428
11 400
100
8 818
-8 897
-6 322
-5 008
-2 575
-5
-2 072
997 305
11 400
New loans and advances subject to public
guarantee systems
of which: households
of which: secured by residential properties
0
0
0
0
0
0
of which: small and medium-sized
1 009 028
1 003 648
5 380
enterprises
estate
of which: secured by commercial real
2 018
2 018
0
0
0
0
0
0
0
0
0
-6 280
-4 685
-28
-28
0
0
0
-1 595
of which: non-financial corporations
1 206 081
1 194 682
279 428
11 400
100
8 818
-8 896
-6 321
-5 008
-2 575
-5
-2 072
995 792
11 400
(in thousands of Euros)
Maximum
amount of
collateral
that can be
taken into
account
Gross
carrying
amount
Inflows for
new
financing
0
0
0
0
0
5 380
44.4 Market risk
Market Risk represents the potential loss resulting from an adverse change in the value of a financial instrument due to fluctuations
in interest rates, foreign exchange rates, equity prices, commodity prices, volatility and credit spread.
Market risk management is integrated with the balance sheet management through the CALCO (Capital Asset and Liability
Committee) structure, being this risk monitored by the Risk Committee.
The main measurement of market risk is the assessment of potential losses under adverse market conditions, for which the Value at
Risk (VaR) methodology is used. novobanco Group’s VaR model uses the Monte Carlo simulation, based on a confidence level of
99% and an investment period of 10 days. Volatilities and correlations are historical, based on an observation period of one year. As
a complement to VaR, stress testing scenarios have been developed, which allow for the evaluation of the impact of losses potentially
higher than those considered by the VaR measurement.
Exchange risk
Interest rate risk
Shares and commodities
Volatility
Credit spread
Diversification effect
Total
December
Annual average Maximum Minimum December
Annual average Maximum Minimum
31.12.2021
31.12.2020
2 494
31 454
3
0
719
( 4 314)
30 356
1 983
24 522
33
66
1 329
( 3 014)
3 451
41 240
225
422
4 146
( 7 004)
826
10 628
0
0
579
1 388
915
14 433
183
37
2 652
( 2 411)
2 187
35 495
192
139
5 051
( 5 289)
6 215
70 332
378
523
12 960
( 14 596)
757
14 433
80
37
1 640
( 1 138)
24 919
42 480
13 421
15 809
37 775
75 812
15 809
(in thousands of Euros)
novobanco Group has a VaR of Euro 30,356 thousand (31 December 2020: Euro 15,809 thousand) in respect of its trading positions.
The decrease is mainly explained by the decrease in the position in derivatives to hedge interest rate risk in the banking portfolio.
novobanco Group has a VaR of Euro 30,356 thousand (31 December 2020: Euro 15,809 thousand)
in respect of its trading positions. The decrease is mainly explained by the decrease in the position in
derivatives to hedge interest rate risk in the banking portfolio.
44.4.1. Interest Rate Risk
44.4.1. Interest Rate Risk
In accordance with the recommendations of European Banking Authority presented in the document EBA/GL/2018/02, novobanco
Group calculates the exposure to its balance sheet interest rate risk based on the prescribed shocks, classifying all notional amounts
of assets, liabilities and off-balance sheet captions which are sensitive to interest rate and are not part of the trading portfolio, by re-
pricing intervals.
In accordance with the recommendations of European Banking Authority presented in the document
EBA/GL/2018/02, novobanco Group calculates the exposure to its balance sheet interest rate risk
based on the prescribed shocks, classifying all notional amounts of assets, liabilities and off-balance
sheet captions which are sensitive to interest rate and are not part of the trading portfolio, by re-pricing
intervals.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Eligible
amounts
Loans to and deposits with banks
Loans and advances to customers
Securities
Other assets
Deposits from banks
Due to customers
Debt securities issued
Other liabilities
Balance sheet GAP (Assets - Liabilities)
Off-Balance sheet
Structural GAP
Accumulated GAP
Loans to and deposits with banks
Loans and advances to customers
Securities
Other assets
Deposits from banks
Due to customers
Debt securities issued
Other liabilities
Off-Balance sheet
Structural GAP
Accumulated GAP
Balance sheet GAP (Assets - Liabilities)
Total
Total
Total
Total
5 881 890
23 967 409
9 090 420
399 920
10 741 465
27 944 598
2 583 780
259 815
(2 190 020)
( 4 829)
(2 194 849)
Eligible
amounts
2 761 847
25 513 997
9 618 019
1 254 599
10 078 636
28 556 210
2 579 547
238 502
(2 304 432)
17 178
(2 287 254)
31.12.2021
3 to 6
months
6 months to
1 year
1 to 5 years
More than 5
years
- 131 -
(in thousands of Euros)
-
3 581 185
770 417
-
10 967
3 966 777
467 755
-
32 521
6 660 611
3 432 181
-
14
1 502 098
3 079 912
-
Up to 3
months
5 838 388
8 256 738
1 340 156
399 920
5 675 517
16 740 547
4 234
118 992
4 697 002
2 331 540
6 476
29 086
78 751
3 941 600
293 808
55 459
130
3 676 897
698 276
56 278
290 066
1 254 015
1 580 987
-
(6 704 088)
2 875 288
(3 828 800)
(3 828 800)
(2 712 502)
814 390
(1 898 112)
(5 726 911)
75 881
( 99 670)
( 23 789)
(5 750 700)
5 693 733
(1 313 965)
4 379 769
(1 370 931)
1 456 955
(2 280 873)
( 823 918)
(2 194 849)
31.12.2020
3 to 6
months
6 months to
1 year
1 to 5 years
More than 5
years
(in thousands of Euros)
4 150
3 709 340
335 434
598 312
4 647 236
3 959 431
2 729 378
875
25 600
6 715 284
(2 068 048)
1 548 714
( 519 334)
(4 641 753)
12 088
3 159 080
702 515
-
3 873 683
350 779
4 455 507
1 784
48 199
4 856 269
( 982 586)
( 121 465)
(1 104 051)
(5 745 805)
39 456
6 930 509
4 045 230
-
11 015 195
214 911
6 312 032
-
49 721
6 576 664
4 438 532
(1 807 383)
2 631 150
(3 114 655)
-
2 651 443
3 169 748
-
5 821 191
225 089
40 035
2 538 386
1
2 803 511
3 017 680
(2 190 279)
827 401
(2 287 254)
Up to 3
months
2 706 153
9 063 624
1 365 092
656 287
13 791 156
5 328 425
15 019 258
38 502
114 981
20 501 166
(6 710 010)
2 587 591
(4 122 419)
(4 122 419)
Sensitivity analyzes are carried out for the interest rate risk of the banking portfolio based on the current difference in the interest rate
mismatch discounted at current rates and the discounted value of the same cash flows, through scenarios of displacement of the
parallel yield curves (displacements of +/- 200 bp) and non-parallel (short rate shock up / down, steepener / flattener shocks),
according to the outliers tests defined by the EBA.
As at 31 December
Exercise average
Exercise maximum
Exercise minimum
As at 31 December
Exercise average
Exercise maximum
Exercise minimum
31.12.2021
(in thousands of Euros)
Parallel
Parallel
increase of
decrease of
200 pb
200 pb
Short Rate
Short Rate
Steepener
Flattener
Shock Up
Shock Down
shock
shock
95 122
24 364
95 122
( 6 001)
( 11 629)
22 301
37 393
( 11 629)
( 65 505)
( 68 842)
( 65 229)
( 73 380)
64 401
66 386
73 334
62 405
100 431
( 159 934)
62 974
100 431
( 99 945)
( 65 726)
44 158
( 159 934)
31.12.2020
(in thousands of Euros)
Parallel
Parallel
increase of
decrease of
200 pb
200 pb
Short Rate
Short Rate
Steepener
Flattener
Shock Up
Shock Down
shock
shock
( 71 576)
109 070
216 808
( 71 576)
52 191
( 13 786)
52 191
( 57 778)
( 87 671)
109 047
235 284
( 87 671)
49 728
( 16 353)
49 728
( 85 746)
13 859
( 83 437)
13 859
( 180 041)
8 430
106 919
182 690
8 430
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 132 -
301
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Loans to and deposits with banks
Loans and advances to customers
Securities
Other assets
Loans to and deposits with banks
Loans and advances to customers
Securities
Other assets
Deposits from banks
Due to customers
Debt securities issued
Other liabilities
Deposits from banks
Due to customers
Debt securities issued
Balance sheet GAP (Assets - Liabilities)
Other liabilities
Off-Balance sheet
Structural GAP
Accumulated GAP
Balance sheet GAP (Assets - Liabilities)
Off-Balance sheet
Structural GAP
Accumulated GAP
Total
Total
Total
Total
Eligible
amounts
5 881 890
Eligible
23 967 409
amounts
9 090 420
399 920
5 881 890
23 967 409
9 090 420
399 920
10 741 465
27 944 598
2 583 780
259 815
10 741 465
27 944 598
2 583 780
(2 190 020)
259 815
( 4 829)
(2 194 849)
(2 190 020)
( 4 829)
(2 194 849)
Eligible
amounts
Up to 3
months
5 838 388
Up to 3
8 256 738
months
1 340 156
399 920
5 838 388
8 256 738
1 340 156
399 920
5 675 517
16 740 547
4 234
118 992
5 675 517
16 740 547
4 234
(6 704 088)
118 992
2 875 288
(3 828 800)
(3 828 800)
(6 704 088)
2 875 288
(3 828 800)
(3 828 800)
Up to 3
months
(in thousands of Euros)
3 to 6
months
6 months to
1 year
1 to 5 years
More than 5
(in thousands of Euros)
years
10 967
6 months to
3 966 777
1 year
467 755
32 521
6 660 611
1 to 5 years
3 432 181
14
More than 5
1 502 098
years
3 079 912
31.12.2021
31.12.2021
-
3 to 6
3 581 185
months
770 417
-
-
3 581 185
770 417
4 697 002
-
2 331 540
6 476
10 967
-
3 966 777
467 755
78 751
-
3 941 600
293 808
32 521
-
6 660 611
3 432 181
130
-
3 676 897
698 276
14
-
1 502 098
3 079 912
290 066
-
1 254 015
1 580 987
56 278
130
3 676 897
698 276
5 693 733
56 278
(1 313 965)
4 379 769
(1 370 931)
5 693 733
(1 313 965)
4 379 769
(1 370 931)
-
290 066
1 254 015
1 580 987
1 456 955
-
(2 280 873)
( 823 918)
(2 194 849)
1 456 955
(2 280 873)
( 823 918)
(in thousands of Euros)
(2 194 849)
29 086
4 697 002
2 331 540
6 476
(2 712 502)
29 086
814 390
(1 898 112)
(5 726 911)
(2 712 502)
814 390
(1 898 112)
(5 726 911)
55 459
78 751
3 941 600
293 808
75 881
55 459
( 99 670)
( 23 789)
(5 750 700)
75 881
( 99 670)
( 23 789)
(5 750 700)
31.12.2020
31.12.2020
3 to 6 months
6 months to 1
year
1 to 5 years
More than 5
(in thousands of Euros)
years
Total
Total
Loans to and deposits with banks
Loans and advances to customers
Securities
Loans to and deposits with banks
Other assets
Loans and advances to customers
Securities
Deposits from banks
Other assets
Due to customers
Debt securities issued
Deposits from banks
Other liabilities
Due to customers
Debt securities issued
Balance sheet GAP (Assets - Liabilities)
Other liabilities
Off-Balance sheet
Structural GAP
Accumulated GAP
Balance sheet GAP (Assets - Liabilities)
Off-Balance sheet
Structural GAP
Accumulated GAP
-
More than 5
2 651 443
years
3 169 748
-
-
5 821 191
2 651 443
3 169 748
225 089
-
40 035
5 821 191
2 538 386
225 089
1
2 803 511
40 035
2 538 386
3 017 680
1
(2 190 279)
2 803 511
827 401
(2 287 254)
3 017 680
(2 190 279)
827 401
Sensitivity analyzes are carried out for the interest rate risk of the banking portfolio based on the current difference in t he interest rate
(2 287 254)
mismatch discounted at current rates and the discounted value of the same cash flows, through scenarios of displacement of the
parallel yield curves (displacements of +/- 200 bp) and non-parallel (short rate shock up / down, steepener / flattener shocks),
Sensitivity analyzes are carried out for the interest rate risk of the banking portfolio based on the current difference in t he interest rate
according to the outliers tests defined by the EBA.
mismatch discounted at current rates and the discounted value of the same cash flows, through scenarios of displacement of the
parallel yield curves (displacements of +/- 200 bp) and non-parallel (short rate shock up / down, steepener / flattener shocks),
according to the outliers tests defined by the EBA.
12 088
6 months to 1
3 159 080
year
702 515
12 088
-
3 873 683
3 159 080
702 515
350 779
-
4 455 507
3 873 683
1 784
350 779
48 199
4 856 269
4 455 507
1 784
( 982 586)
48 199
( 121 465)
4 856 269
(1 104 051)
(5 745 805)
( 982 586)
( 121 465)
(1 104 051)
(5 745 805)
4 150
3 709 340
3 to 6 months
335 434
4 150
598 312
4 647 236
3 709 340
335 434
3 959 431
598 312
2 729 378
4 647 236
875
3 959 431
25 600
6 715 284
2 729 378
875
(2 068 048)
25 600
1 548 714
6 715 284
( 519 334)
(4 641 753)
(2 068 048)
1 548 714
( 519 334)
(4 641 753)
39 456
6 930 509
1 to 5 years
4 045 230
39 456
-
11 015 195
6 930 509
4 045 230
214 911
-
6 312 032
11 015 195
-
214 911
49 721
6 576 664
6 312 032
-
4 438 532
49 721
(1 807 383)
6 576 664
2 631 150
(3 114 655)
4 438 532
(1 807 383)
2 631 150
(3 114 655)
2 706 153
Up to 3
9 063 624
months
1 365 092
2 706 153
656 287
13 791 156
9 063 624
1 365 092
5 328 425
656 287
15 019 258
13 791 156
38 502
5 328 425
114 981
20 501 166
15 019 258
38 502
(6 710 010)
114 981
2 587 591
20 501 166
(4 122 419)
(4 122 419)
(6 710 010)
2 587 591
(4 122 419)
(4 122 419)
2 761 847
Eligible
25 513 997
amounts
9 618 019
2 761 847
1 254 599
25 513 997
9 618 019
10 078 636
1 254 599
28 556 210
2 579 547
10 078 636
238 502
28 556 210
2 579 547
(2 304 432)
238 502
17 178
(2 287 254)
(2 304 432)
17 178
(2 287 254)
(in thousands of Euros)
Total
Total
31.12.2021
Sensitivity analyzes are carried out for the interest rate risk of the banking portfolio based on the
current difference in the interest rate mismatch discounted at current rates and the discounted value
of the same cash flows, through scenarios of displacement of the parallel yield curves (displacements
of +/- 200 bp) and non-parallel (short rate shock up / down, steepener / flattener shocks), according
to the outliers tests defined by the EBA.
As at 31 December
Exercise average
Exercise maximum
As at 31 December
Exercise minimum
Exercise average
Exercise maximum
Exercise minimum
As at 31 December
Exercise average
Exercise maximum
As at 31 December
Exercise minimum
Exercise average
Exercise maximum
Exercise minimum
Parallel
increase of
200 pb
Parallel
95 122
increase of
24 364
200 pb
95 122
95 122
( 6 001)
24 364
95 122
( 6 001)
Parallel
increase of
200 pb
Parallel
( 71 576)
increase of
109 070
200 pb
216 808
( 71 576)
( 71 576)
109 070
216 808
( 71 576)
Parallel
decrease of
200 pb
Parallel
( 11 629)
decrease of
22 301
200 pb
37 393
( 11 629)
( 11 629)
22 301
37 393
( 11 629)
Parallel
decrease of
200 pb
Parallel
52 191
decrease of
( 13 786)
200 pb
52 191
52 191
( 57 778)
( 13 786)
52 191
( 57 778)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Short Rate
Shock Up
Short Rate
Shock Down
31.12.2021
Steepener
shock
(in thousands of Euros)
Flattener
shock
( 65 505)
Short Rate
( 68 842)
Shock Up
( 65 229)
( 65 505)
( 73 380)
( 68 842)
( 65 229)
( 73 380)
64 401
Short Rate
66 386
Shock Down
73 334
64 401
62 405
66 386
73 334
62 405
31.12.2020
100 431
( 159 934)
Steepener
Flattener
62 974
( 99 945)
shock
shock
100 431
( 65 726)
100 431
( 159 934)
44 158
( 159 934)
62 974
( 99 945)
( 65 726)
100 431
(in thousands of Euros)
( 159 934)
44 158
Short Rate
Shock Up
Short Rate
Shock Down
31.12.2020
Steepener
shock
(in thousands of Euros)
Flattener
shock
( 87 671)
Short Rate
109 047
Shock Up
235 284
( 87 671)
( 87 671)
109 047
235 284
( 87 671)
49 728
Short Rate
( 16 353)
Shock Down
49 728
49 728
( 85 746)
( 16 353)
49 728
( 85 746)
13 859
Steepener
( 83 437)
shock
13 859
13 859
( 180 041)
( 83 437)
13 859
( 180 041)
8 430
Flattener
106 919
shock
182 690
8 430
8 430
106 919
182 690
8 430
- 133 -
- 133 -
302
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
44.4.2 IBOR Reform
44.4.2 IBOR Reform
As part of the implementation of the Commission Regulation (EU) 2021/25 of 13 January 2021 - Reform of reference interest rates,
which led to the transition from EONIA to € STR, during 2020, the Group changed the discount curve of its positions in derivative
financial instruments cleared with central counterparty (CCP) from EUR OIS to EUR € STR and from USD OIS to USD SOFR. With
regard to bilateral derivatives, during 2021 the Group renegotiated several CSA agreements to change to risk free rate curves, and
in cases where no agreement was reached the curves were changed to EUR EURSTR + 8.5 basis points. According to the
implementation principle of the referred regulation, of not occurring substantial changes to the original objective of risk management
or discontinuation of the hedging relationships, the Group did not record relevant impacts on the retrospective and prospecti ve
effectiveness, taking into account that all assets and liabilities involved in the hedging relationships were su bject to the same change
(hedged and hedging items). Regarding other financial instruments, taking into consideration the reduced exposure of the Group to
instruments in foreign currency, there were no relevant impacts.
hedging relationships, the Group did not record relevant impacts on the retrospective and prospective
effectiveness, taking into account that all assets and liabilities involved in the hedging relationships
were subject to the same change (hedged and hedging items). Regarding other financial instruments,
taking into consideration the reduced exposure of the Group to instruments in foreign currency, there
were no relevant impacts.
The following table presents the average interest rates for the Group’s major financial asset and liability
categories, as at 31 December 2021 and 2020, as well as the respective average balances and interest
for the exercise:
As part of the implementation of the Commission Regulation (EU) 2021/25 of 13 January 2021 - Reform
of reference interest rates, which led to the transition from EONIA to € STR, during 2020, the Group
changed the discount curve of its positions in derivative financial instruments cleared with central
counterparty (CCP) from EUR OIS to EUR € STR and from USD OIS to USD SOFR. With regard to
bilateral derivatives, during 2021 the Group renegotiated several CSA agreements to change to risk
free rate curves, and in cases where no agreement was reached the curves were changed to EUR
EURSTR + 8.5 basis points. According to the implementation principle of the referred regulation, of not
occurring substantial changes to the original objective of risk management or discontinuation of the
The following table presents the average interest rates for the Group’s major financial asset and liability categories, as at 31 December
2021 and 2020, as well as the respective average balances and interest for the exercise:
31.12.2021
31.12.2020
Average balance
of the period
Interest of the
exercise
Average
interest rate
Average balance
of the period
Interest of the
exercise
Average
interest rate
(in thousands of Euros)
Monetary assets
Loans and advances to customers
Securities and other
4 601 590
24 994 703
10 241 464
2 148
506 745
132 769
Financial assets and differentials
39 837 757
641 662
Monetary Liabilities
Due to customers
Differential liabilities
10 496 796
26 580 488
1 690 086
( 68 036)
51 328
14 076
Financial liabilities and differentials
39 837 757
68 268
Net interest income
573 394
0.05%
2.00%
1.28%
1.59%
-0.64%
0.19%
0.00%
0.17%
1.42%
2 993 238
24 939 140
10 664 515
16 361
534 229
136 602
38 596 893
687 192
9 913 212
25 787 192
1 815 289
( 23 410)
71 688
10 128
38 596 893
132 058
555 134
0.54%
2.11%
1.26%
1.76%
-0.23%
0.27%
0.00%
0.34%
1.42%
44.4.3 Foreign Exchange Risk
Regarding foreign exchange risk, the breakdown of assets and liabilities, by currency, as at 31 December
2021 and 2020, is analysed as follows:
303
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 134 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
44.4.3 Foreign Exchange Risk
Regarding foreign exchange risk, the breakdown of assets and liabilities, by currency, as at 31 December 2021 and 2020, is analysed
as follows:
31.12.2021
Spot
Forward
Other
elements
Net exposure
Spot
Forward
Other
elements
Net exposure
(in thousands of Euros)
31.12.2020
USD UNITED STATES DOLLAR
( 176 696)
169 546
( 15)
( 7 165)
( 754 078)
780 879
99
26 900
( 66 761)
69 964
( 2 067)
GBP GREAT BRITISH POUND
( 42 582)
47 842
BRL BRAZILIAN REAL
MOP MACAO PATACA
JPY JAPANESE YEN
CHF SWISS FRANC
SEK SWEDISH KRONE
NOK NORWEGIAN KRONE
CAD CANADIAN DOLLAR
ZAR SOUTH AFRICAN RAND
AUD AUSTRALIAN DOLLAR
VEB VENEZUELAN BOLIVAR
783
2 261
-
-
( 1 340)
2 310
( 13 138)
16 281
19 782
54 399
( 17 728)
1 129
10 257
2
( 19 077)
( 54 035)
21 502
( 1 207)
( 9 990)
-
PLN POLISH ZLOTY
36 100
( 35 643)
MAD MOROCCAN DIRHAN
( 2 996)
2 936
MXN MEXICAN PESO
AOA ANGOLAN KWANZA
CVE CAPE VERDEAN ESCUDO
HKD HONG-KONG DOLLAR
( 13)
( 1)
( 146)
( 1 916)
9
-
-
2 434
CZK CZECH KORUNA
16 208
( 17 041)
DZD ALGERIAN DINAR
5 507
-
CNY YUAN REN-MIN-BI
51 352
( 50 975)
OTHER
( 7 802)
6 785
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5 260
783
2 261
970
3 143
705
364
3 774
( 78)
267
2
457
( 60)
( 4)
( 1)
( 146)
518
( 833)
5 507
377
73 444
( 72 362)
2 127
( 133)
( 8 540)
19 612
46 751
( 621)
( 35)
5 053
1
-
-
10 903
( 19 334)
( 46 086)
3 518
( 230)
( 4 615)
-
28 281
( 29 125)
( 3 081)
( 197)
8 781
( 81)
( 1 545)
9 573
4 447
9 427
2 984
373
-
-
1 766
( 9 979)
-
( 9 487)
-
-
2 067
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 136
1 082
2 127
1 934
2 363
278
665
2 897
( 265)
438
1
( 844)
( 97)
176
8 781
( 81)
221
( 406)
4 447
( 60)
( 27 378)
( 1 017)
( 16 072)
( 11 306)
Note: assets / (liabilities)
( 66 578)
81 677
( 15)
15 084
( 643 647)
667 863
99
24 315
44.5 Liquidity Risk
44.5 Liquidity Risk
Liquidity risk is the current or future risk that arises from an institution's inability to meet its liabilities as they mature, without incurring
substantial losses.
Banks are subject to liquidity risk due to their maturity transformation business (long-term lenders and
short-term depositors), so prudent liquidity risk management is therefore crucial.
Liquidity risk is the current or future risk that arises from an institution’s inability to meet its liabilities as
they mature, without incurring substantial losses.
Liquidity risk can be divided into two types:
Liquidity risk can be divided into two types:
Liquidity of assets (market liquidity risk) - consists in the impossibility of selling a certain type of asset due to the lack of
liquidity in the market, which translates into the widening of the bid / offer spread or the application of a haircut to the market
value;
As at 31 December 2021, the value of the asset portfolio eligible as collateral for rediscounting operations
with the ECB, after haircuts, amounted to Euro 16.5 billion (31 December 2020: Euro 16.7 billion). This
amount includes all the exposure to Portuguese sovereign debt, in the total amount of approximately
Euro 2.5 billion (31 December 2020: Euro 2.5 billion).
• Liquidity of assets (market liquidity risk) - consists in the impossibility of selling a certain type of
asset due to the lack of liquidity in the market, which translates into the widening of the bid / offer
spread or the application of a haircut to the market value;
Financing (funding liquidity risk) - consists of the impossibility of financing the assets in the market and / or refinancing the
debt that is maturing, in the terms and in the desired currency. This impossibility can be reflected through a strong increase
in the cost of financing or the requirement for collateral to obtain funds. The difficulty of (re) financing can lead to the sale of
assets, even if incurring significant losses. The risk of (re) financing must be minimized through an adequate diversification
of funding sources and maturity terms.
During 2021, gross financing from the ECB increased by Euro 974 million to a total of Euro 8.0 billion
(2020: increase in the amount of Euro 910 million for a total of Euro 7.0 billion).
• Financing (funding liquidity risk) - consists of the impossibility of financing the assets in the
market and / or refinancing the debt that is maturing, in the terms and in the desired currency. This
impossibility can be reflected through a strong increase in the cost of financing or the requirement
for collateral to obtain funds. The difficulty of (re) financing can lead to the sale of assets, even
if incurring significant losses. The risk of (re) financing must be minimized through an adequate
diversification of funding sources and maturity terms.
As at 31 December 2021, the value of the asset portfolio eligible as collateral for rediscounting operations with the ECB, af ter haircuts,
amounted to Euro 16.5 billion (31 December 2020: Euro 16.7 billion). This amount includes all the exposure to Portuguese sovereign
debt, in the total amount of approximately Euro 2.5 billion (31 December 2020: Euro 2.5 billion).
The liquidity of novobanco Group is managed in a centralized manner, in the Headquarters, for the
prudential consolidation perimeter, and the analysis and decision making made based on the mismatch
reports, which allow, not only to identify negative mismatches but also to make a dynamic hedging
of those mismatches. As at 31 December 2021 and 2020, the calculation of the liquid contractual
deficit and the counterbalancing capacity was performed following the ITS (Implementing Technical
Standards) rules:
Banks are subject to liquidity risk due to their maturity transformation business (long-term lenders and short-term depositors), so
prudent liquidity risk management is therefore crucial.
During 2021, gross financing from the ECB increased by Euro 974 million to a total of Euro 8.0 billion (2020: increase in the amount
of Euro 910 million for a total of Euro 7.0 billion).
304
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 135 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The liquidity of novobanco Group is managed in a centralized manner, in the Headquarters, for the prudential consolidation
perimeter, and the analysis and decision making made based on the mismatch reports, which allow, not only to identify negative
mismatches but also to make a dynamic hedging of those mismatches. As at 31 December 2021 and 2020, the calculation of the
liquid contractual deficit and the counterbalancing capacity was performed following the ITS (Implementing Technical Standard s)
rules:
OUTPUT
Liabilities from emited transferable securities (if they're not treated as retail
deposits)
Liabilities from guaranteed lending operations and operations associated to
financial markets
Behavioral output from deposits
Exchange swaps and derivatives
Other output
Total Output
INPUT
Total
Up to 7 days
7 days to 1
month
1 to 3 months 3 to 6 months
6 months to 1
year
More than 1
year
31.12.2021
(in thousands of Euros)
756 943
9 948 705
-
-
-
-
626 980
52 669
-
-
22 055
734 888
2 514 555
6 754 500
29 491 108
390 972
567 652
478 049
5 940
-
86 929
45 222
-
93 663
423 127
-
116 964
296 774
28 505 805
43 099
11 515
25 964
33 814
24 299
432 720
41 242 456
396 912
759 132
569 460
171 578
2 893 163
36 452 212
Secured lending operations and operations associated to financial markets
172 139
-
-
-
-
40 991
131 148
Behavioral inputs from loans and advances
Exchange swaps and derivatives
Own portfolio securities maturing and other entries
Total Input
Net contractual deficit
32 363 686
5 164 062
721 805
7 824
10 385 672
147 916
43 643 303
5 319 802
2 244
40 849
130 887
173 980
2 400 846
4 922 890
( 585 152)
5 177
422 980
503 691
931 848
362 388
14 194
61 078
15 125
27 162 885
39 323
149 751
707 936
607 880
8 287 362
783 208
703 320
35 731 145
611 630
(2 189 843)
( 721 067)
Accumulated net contractual deficit
4 922 890
4 337 738
4 700 126
5 311 756
3 121 913
2 400 846
CAPACITY TO READJUSTMENT
Cash
Deployable reserves from the central bank
Stock Inicial Up to 7 days
151 699
4 999 674
(4 999 674)
7 days to 1
month
1 to 3 months 3 to 6 months
6 months to 1
year
More than 1
year
Negotiable and non-negotiable assets eligible for the central bank
7 261 006
-
432 159
( 326 174)
( 537 314)
( 451 865)
(6 233 780)
Authorized facilities and not utilized received
Net variation of capacity to adjustment
( 0)
( 42 401)
( 73 498)
( 226 102)
( 281 873)
1 314 154
( 690 281)
(5 042 075)
358 662
( 552 276)
( 819 187)
862 289
(6 924 061)
Accumulated capacity to readjustment
12 412 379
7 370 304
7 728 966
7 176 690
6 357 503
7 219 792
295 731
305
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 136 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
OUTPUT
Liabilities from emited transferable securities (if they're not treated as retail
deposits)
Liabilities from guaranteed lending operations and operations associated to
financial markets
Behavioral output from deposits
Exchange swaps and derivatives
Other output
Total Output
INPUT
31.12.2020
(in thousands of Euros)
Total
Up to 7 days
7 days to 1
month
1 to 3 months 3 to 6 months
6 months to 1
year
More than 1
year
153 890
-
-
-
-
9
153 881
9 161 995
68 874
106 104
53 504
150 000
264 458
8 519 055
30 328 564
625 680
550 075
302 562
110 144
116 570
144 781
147 268
283 894
140 000
174 392
423 579
29 164 193
32 623
11 515
34 865
19 374
398 560
40 820 205
481 581
367 455
624 665
368 530
722 911
38 255 064
Secured lending operations and operations associated to financial markets
203 306
60 917
-
-
-
-
142 389
Behavioral inputs from loans and advances
Exchange swaps and derivatives
Own portfolio securities maturing and other entries
Total Input
Net contractual deficit
30 107 412
2 106 702
897 438
12 128 378
103 389
103 580
58 182
145 071
155 916
166 741
287 285
376 999
236 943
48 500
835 242
472 123
27 066 721
71 166
242 026
898 046
9 758 595
43 336 534
2 374 589
359 168
831 025
1 120 685
1 441 335
37 209 731
2 516 329
1 893 008
( 8 286)
206 360
752 156
718 425
(1 045 332)
Accumulated net contractual deficit
1 893 008
1 884 722
2 091 081
2 843 237
3 561 662
2 516 329
CAPACITY TO READJUSTMENT
Cash
Deployable reserves from the central bank
Stock Inicial Up to 7 days
149 205
2 030 915
(2 030 915)
7 days to 1
month
1 to 3 months 3 to 6 months
6 months to 1
year
More than 1
year
Negotiable and non-negotiable assets eligible for the central bank
8 033 197
Authorized facilities and not utilized received
Net variation of capacity to adjustment
67 249
( 29 275)
106 994
( 123 762)
( 91 281)
( 587 185)
(7 262 493)
( 55 212)
( 199 759)
( 350 461)
( 288 680)
923 388
(1 992 941)
51 782
( 323 521)
( 441 743)
( 875 865)
(6 339 104)
Accumulated capacity to readjustment
10 213 317
8 220 376
8 272 158
7 948 636
7 506 894
6 631 029
291 924
As at 31 December 2020, there was an accumulated 1-year net contractual surplus of Euro 3,562 million, having shifted at the end
of 2021 to an accumulated 1-year net contractual deficit of Euro 3,122 million. This improvement is due to that, at the end of 2021,
there was a Euro 1,627 million takeover to the ECB in less than 1 year.
As at 31 December 2020, there was an accumulated 1-year net contractual surplus of Euro 3,562
million, having shifted at the end of 2021 to an accumulated 1-year net contractual deficit of Euro 3,122
million. This improvement is due to that, at the end of 2021, there was a Euro 1,627 million takeover to
the ECB in less than 1 year.
Ratio - NSFR). The LCR aims to promote banks’ resilience to short-term liquidity risk, ensuring that they
hold high-quality liquid assets, sufficient to survive a severe stress scenario, for a period of 30 days,
while the NSFR aims to ensure that Banks maintain stable financing for their assets and off-balance
sheet operations, for a period of one year.
The 1-year counterbalancing capacity the end of 2021 was Euro 7,220 million, Euro 589 million more than the figure recorded at the
end of 2020 (Euro 6,631 million).
The 1-year counterbalancing capacity the end of 2021 was Euro 7,220 million, Euro 589 million more
than the figure recorded at the end of 2020 (Euro 6,631 million).
In order to anticipate possible negative impacts, internal liquidity stress scenarios representative of the types of crisis that may occur
are carried out, based on idiosyncratic scenarios (characterized by a loss of confidence in the Bank), and market scenarios.
The average LCR for the 12 months of 2021 was 150% which compares to 146% in 2020. The NSFR in
turn stood at 117% on December 31, 2021 which compares to 112% at the end of 2020.
In order to anticipate possible negative impacts, internal liquidity stress scenarios representative of the
types of crisis that may occur are carried out, based on idiosyncratic scenarios (characterized by a loss
of confidence in the Bank), and market scenarios.
In addition, and given the importance of liquidity risk management, the regulatory legislation includes a liquidity coverage ratio
(Liquidity Coverage Ratio - LCR) and a stable financing ratio (Net Stable Funding Ratio - NSFR). The LCR aims to promote banks'
resilience to short-term liquidity risk, ensuring that they hold high-quality liquid assets, sufficient to survive a severe stress scenario,
for a period of 30 days, while the NSFR aims to ensure that Banks maintain stable financing for their assets and off -balance sheet
In addition, and given the importance of liquidity risk management, the regulatory legislation includes a
operations, for a period of one year.
liquidity coverage ratio (Liquidity Coverage Ratio - LCR) and a stable financing ratio (Net Stable Funding
In accordance with current regulatory legislation, the Group is obliged to comply with a minimum limit
of 100% in the LCR and NSFR.
The information on encumbered and unencumbered assets, as defined by Instruction no. 28/2014
of Bank of Portugal (note that this information is prepared from a prudential perspective, where the
consolidation perimeter differs from that used in the financial statements presented) is shown in the
table below:
The average LCR for the 12 months of 2021 was 150% which compares to 146% in 2020. The NSFR in turn stood at 117% on
December 31, 2021 which compares to 112% at the end of 2020.
In accordance with current regulatory legislation, the Group is obliged to comply with a minimum limit of 100% in the LCR and NSFR.
The information on encumbered and unencumbered assets, as defined by Instruction no. 28/2014 of Bank of Portugal (note that t his
information is prepared from a prudential perspective, where the consolidation perimeter differs from that used in the financial
statements presented) is shown in the table below:
306
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 137 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
As at 31 December 2020, there was an accumulated 1-year net contractual surplus of Euro 3,562 million, having shifted at the end
of 2021 to an accumulated 1-year net contractual deficit of Euro 3,122 million. This improvement is due to that, at the end of 2021,
there was a Euro 1,627 million takeover to the ECB in less than 1 year.
The 1-year counterbalancing capacity the end of 2021 was Euro 7,220 million, Euro 589 million more than the figure recorded at the
end of 2020 (Euro 6,631 million).
In order to anticipate possible negative impacts, internal liquidity stress scenarios representative of the types of crisis that may occur
are carried out, based on idiosyncratic scenarios (characterized by a loss of confidence in the Bank), and market scenarios.
In addition, and given the importance of liquidity risk management, the regulatory legislation includes a liquidity coverage ratio
(Liquidity Coverage Ratio - LCR) and a stable financing ratio (Net Stable Funding Ratio - NSFR). The LCR aims to promote banks'
resilience to short-term liquidity risk, ensuring that they hold high-quality liquid assets, sufficient to survive a severe stress scenario,
for a period of 30 days, while the NSFR aims to ensure that Banks maintain stable financing for their assets and off-balance sheet
operations, for a period of one year.
The average LCR for the 12 months of 2021 was 150% which compares to 146% in 2020. The NSFR in turn stood at 117% on
December 31, 2021 which compares to 112% at the end of 2020.
In accordance with current regulatory legislation, the Group is obliged to comply with a minimum limit of 100% in the LCR and NSFR.
The information on encumbered and unencumbered assets, as defined by Instruction no. 28/2014 of Bank of Portugal (note that this
information is prepared from a prudential perspective, where the consolidation perimeter differs from that used in the financial
statements presented) is shown in the table below:
Assets
Assets
Assets of the institution
Equity instruments
Debt securities
Other assets
Assets of the institution
Equity instruments
Debt securities
Other assets
Collateral received
Collateral received
Equity instruments
Debt securities
Other collateral received
Own debt securities issued other than own covered bonds
or ABS
31.12.2021
(in thousands of Euros)
Carrying book value
of encumbered
assets
Fair value of
encumbered assets
Carrying book value
of unencumbered
assets
Fair value of
unencumbered
assets
13 890 508
-
2 306 980
11 583 528
n/a
-
2 306 980
n/a
31 052 745
1 754 771
7 361 758
21 936 216
n/a
1 754 771
7 361 758
n/a
31.12.2020
(in thousands of Euros)
Carrying book value
of encumbered
assets
Fair value of
encumbered assets
Carrying book value
of unencumbered
assets
Fair value of
unencumbered
assets
12 868 205
-
1 999 618
10 868 587
n/a
-
1 999 618
n/a
31 849 466
1 866 679
8 500 364
21 482 423
n/a
1 866 679
8 500 364
n/a
31.12.2021
31.12.2020
Fair value of
encumbered
collateral received or
of own debt securities
issued
Fair value of collateral
received or of own
debt securities issued
and encumberable
Fair value of
encumbered
collateral received or
of own debt securities
issued
Fair value of collateral
received or of own
debt securities issued
and encumberable
(in thousands of Euros)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31.12.2021
31.12.2020
(in thousands of Euros)
Encumbered assets, encumbered collateral received and
associated liabilities
Associated liabilities,
contingent liabilities
and securities loaned
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Assets, collateral
received and own
debt securities issued
other than
encumbered own
covered bonds or
ABS
Associated liabilities,
contingent liabilities
and securities loaned
Assets, collateral
received and own
debt securities issued
other than
encumbered own
covered bonds or
- 136 -
ABS
Carrying book value of the selected financial liabilities
10 115 522
13 890 508
9 250 342
12 868 205
The encumbered assets are represented essentially by credits and securities used in financing operations with the ECB, in repo
operations, in mortgage bond issues and in securitizations. There are also assets given in collateral to hedge the Bank's counterparty
risk in derivative transactions.
44.6 Operational risk
Operational risk generally translates into the probability of the occurrence of events with negative impacts, in the results or in the
capital, resulting from the inadequacy or deficiency of procedures and information systems, the behavior of people or motivated by
external events, including legal risks. Thus, operational risk is understood as the calculation of the following risks: operational,
information systems, compliance and reputation.
For the management of operational risk, a system was developed and implemented to ensure the uniformity, systematization and
recurrence of the activities for the identification, monitoring, control and mitigation of this risk. This system is supported by an
organizational structure, integrated in the Global Risk Department exclusively dedicated to this task, as well as by Operational Risk
Management Representatives designated by each of the departments, branches and subsidiaries considered relevant, which are
responsible for complying with the procedures. and the day-to-day management of this Risk in its areas of competence.
44.7 Capital Management and Solvency Ratio
The main objective of the Group’s capital management is to ensure compliance with the Group novobanco’s strategic objectives in
terms of capital adequacy, respecting and enforcing the requirements for calculating risk-weighted assets and own funds and ensuring
compliance with the levels of solvency and leverage defined by the supervisory entities, in particular by the European Central Bank
(ECB) – the entity directly responsible for the supervision of novobanco - and by the Bank of Portugal, and internally stipulated risk
appetite for capital metrics.
The definition of the strategy for capital adequacy management rests with the Executive Board of Directors and is integrated in the
global definition of novobanco Group objectives.
The capital ratios of novobanco Group are calculated based on the rules defined in Directive 2013/36/EU and Regulation (EU) nº
575/2013 (CRR) that define the criteria for the access to the credit institution and investment company activity and determine the
prudential requirements to be observed by those same entities, in particular to the calculation of the ratios mentioned above.
novobanco Group is authorized to apply the Internal Ratings-Based Approach (IRB) for the calculation of risk weighted assets by
credit risk. In particular, the IRB method is applied to the exposure classes of institutions, corporate and retail of novobanco Group.
The equity’ risk classes, the positions taken in the form of securitization, the positions taken in the form of participation units in
investment funds, and the elements that are not credit obligations are always handled by the IRB method regardless of novobanco’s
entities in which the respective exposures are recorded. The standard method is used in the determination of risk weighted assets
by market and operational risks.
The regulatory capital components considered in the determination of solvency ratios are divided into own funds of level 1 (common
equity Tier I or CET I), additional own funds of level 1 (additional Tier I) which combined with the CET I constitute the own funds of
level I (Tier I), and own funds of level 2 (or Tier II) which added to the Tier I represent the total own funds.
The total own funds of novobanco Group are composed by elements of CET I and Tier II
Additional information on the evolution and composition of novobanco Group's capital ratios can be found in the Group's Market
Discipline Document (point 3. Capital Adequacy).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 137 -
307
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
and investment company activity and determine the prudential requirements to be observed by those
same entities, in particular to the calculation of the ratios mentioned above.
novobanco Group is authorized to apply the Internal Ratings-Based Approach (IRB) for the calculation
of risk weighted assets by credit risk. In particular, the IRB method is applied to the exposure classes
of institutions, corporate and retail of novobanco Group. The equity’ risk classes, the positions taken
in the form of securitization, the positions taken in the form of participation units in investment funds,
and the elements that are not credit obligations are always handled by the IRB method regardless of
novobanco’s entities in which the respective exposures are recorded. The standard method is used in
the determination of risk weighted assets by market and operational risks.
The regulatory capital components considered in the determination of solvency ratios are divided into
own funds of level 1 (common equity Tier I or CET I), additional own funds of level 1 (additional Tier I)
which combined with the CET I constitute the own funds of level I (Tier I), and own funds of level 2 (or
Tier II) which added to the Tier I represent the total own funds.
The total own funds of novobanco Group are composed by elements of CET I and Tier II
Additional information on the evolution and composition of novobanco Group’s capital ratios can be
found in the Group’s Market Discipline Document (point 3. Capital Adequacy).
The summary of own funds, risk weighted assets and capital ratios capital of novobanco Group as at 31
December 2021 and 2020 are presented in the following table:
The encumbered assets are represented essentially by credits and securities used in financing
operations with the ECB, in repo operations, in mortgage bond issues and in securitizations. There are
also assets given in collateral to hedge the Bank’s counterparty risk in derivative transactions.
44.6 Operational risk
Operational risk generally translates into the probability of the occurrence of events with negative
impacts, in the results or in the capital, resulting from the inadequacy or deficiency of procedures and
information systems, the behavior of people or motivated by external events, including legal risks.
Thus, operational risk is understood as the calculation of the following risks: operational, information
systems, compliance and reputation.
For the management of operational risk, a system was developed and implemented to ensure the
uniformity, systematization and recurrence of the activities for the identification, monitoring, control
and mitigation of this risk. This system is supported by an organizational structure, integrated in the
Global Risk Department exclusively dedicated to this task, as well as by Operational Risk Management
Representatives designated by each of the departments, branches and subsidiaries considered
relevant, which are responsible for complying with the procedures. and the day-to-day management
of this Risk in its areas of competence.
44.7 Capital Management and Solvency Ratio
The main objective of the Group’s capital management is to ensure compliance with the Group
novobanco’s strategic objectives in terms of capital adequacy, respecting and enforcing the
requirements for calculating risk-weighted assets and own funds and ensuring compliance with the
levels of solvency and leverage defined by the supervisory entities, in particular by the European
Central Bank (ECB) – the entity directly responsible for the supervision of novobanco - and by the Bank
of Portugal, and internally stipulated risk appetite for capital metrics.
The definition of the strategy for capital adequacy management rests with the Executive Board of
Directors and is integrated in the global definition of novobanco Group objectives.
The capital ratios of novobanco Group are calculated based on the rules defined in Directive 2013/36/
EU and Regulation (EU) nº 575/2013 (CRR) that define the criteria for the access to the credit institution
308
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes The summary of own funds, risk weighted assets and capital ratios capital of novobanco Group as at 31 December 2021 and 2020
are presented in the following table:
Realised ordinary share capital, issue premiums and own shares
Reserves and Retained earnings
Net income for the year attributable to shareholders of the Bank
Non-controlling interests (minorities)
A - Equity (prudential perspective)
Net income for the year attributable to shareholders of the Bank not eligible
Non-controlling interests (minorities)
Adjustments of additional valuation
Transitional period to IFRS9
Goodwill and other intangibles
Insufficiency of provisions given the expected losses
Deferred tax assets and shareholdings in financial companies
Other(2)
B - Regulatory adjustments to equity
C - Own principal funds level 1 - CET I (A+B)
Other eligible instruments for additional Tier 1
D - Additional own funds Level 1 - Additional Tier 1
E - Level 1 own funds - Tier I (C+D)
Subordinated liabilities elegible for Tier II
Other elements elegible for Tier II
Regulatory adjustments for Tier II
F - Level 2 own funds - Tier II
G - Eligible own funds (E+F)
Credit risk
Market risk
Operational risk
H - Risk Weighted Assets
Solvability ratio
CET I ratio
Tier I ratio
Solvability ratio
Leverage ratio(3)
(in million Euros)
31.12.2021(4)
31.12.2020(1)
6 055
( 3 109)
159
19
3 124
-
( 13)
( 10)
237
( 69)
( 8)
( 168)
( 325)
( 357)
2 768
1
1
5 900
( 1 447)
( 1 329)
17
3 141
-
( 10)
( 11)
356
( 57)
( 59)
( 62)
( 395)
( 240)
2 902
1
1
2 769
2 903
399
108
-
507
3 276
22 043
1 207
1 678
24 929
11.1%
11.1%
13.1%
399
113
-
511
3 415
23 819
1 279
1 592
26 689
10.9%
10.9%
12.8%
6.0%
6.2%
(C/H)
(E/H)
(G/H)
(1) Restated values with references to 2020.
(2) Since the end of 2020 includes adjustments to CCA receivable, reflected at reserve level, and not received from the Resolution Fund.
(3) The leverage ratio results from dividing Tier 1 by the exposure measure in accordance to the terms of the CRR.
(4) Provisional values.
NOTE 45 – NPL DISCLOSURES
Following the recommendations of the European Banking Authority explained in document EBA/
GL/2018/10, credit institutions with an NPL (Non Performing Exposures) ratio greater than 5% must
publish a set of information regarding NPE, restructured loans and foreclosed assets, according to
a standard format, which we present below (we emphasize that this information is prepared from a
prudential perspective, whose consolidation perimeter differs from the consolidation perimeter of the
financial statements presented):
309
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 140 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Credit quality of forborne exposure
NOTE 45 – NPL DISCLOSURES
NOTE 45 – NPL DISCLOSURES
Following the recommendations of the European Banking Authority explained in document EBA/GL/2018/10, credit institutions with
an NPL (Non Performing Exposures) ratio greater than 5% must publish a set of information regarding NPE, restructured loans and
Following the recommendations of the European Banking Authority explained in document EBA/GL/2018/10, credit institutions with
foreclosed assets, according to a standard format, which we present below (we emphasize that this information is prepared from a
an NPL (Non Performing Exposures) ratio greater than 5% must publish a set of information regarding NPE, restructured loans a nd
prudential perspective, whose consolidation perimeter differs from the consolidation perimeter of the financial statements presented):
foreclosed assets, according to a standard format, which we present below (we emphasize that this information is prepared from a
prudential perspective, whose consolidation perimeter differs from the consolidation perimeter of the financial statements presented):
Credit quality of forborne exposure
Credit quality of forborne exposure
(in thousands of Euros)
Accumulated impairment,
accumulated negative changes
Accumulated impairment,
in fair value due to credit risk
accumulated negative changes
and provisions
in fair value due to credit risk
and provisions
(in thousands of Euros)
Collateral received and financial
guarantees received on forborne
Collateral received and financial
exposures
guarantees received on forborne
exposures
Gross carrying amount/nominal amount of exposures with
forbearance measures
Gross carrying amount/nominal amount of exposures with
forbearance measures
Performing
forborne
Performing
forborne
666 511
0
666 511
5 650
0
0
5 650
431
0
524 708
431
135 722
524 708
0
135 722
4 169
0
670 679
4 169
670 679
Non-performing forborne
Non-performing forborne
Of which
defaulted
Of which
defaulted
913 102
Of which subject
to impairment
Of which subject
913 102
to impairment
0
913 102
52
0
0
52
90 559
0
670 482
90 559
152 009
670 482
0
152 009
1 711
0
914 813
1 711
914 813
0
913 102
52
0
0
52
90 559
0
670 482
90 559
152 009
670 482
0
152 009
1 711
0
914 813
1 711
914 813
913 102
0
913 102
52
0
0
52
90 559
0
670 482
90 559
152 009
670 482
0
152 009
1 711
0
914 813
1 711
914 813
Loans and advances
Central banks
Loans and advances
General governments
Central banks
Credit institutions
General governments
Other financial corporations
Credit institutions
Non-financial corporations
Other financial corporations
Households
Non-financial corporations
Debt securities
Households
Loan commitments given
Debt securities
Total
Loan commitments given
Total
On performing
forborne
On performing
exposures
forborne
exposures
On non-
performing
On non-
forborne
performing
exposures
forborne
exposures
-78 116
0
-78 116
-525
0
0
-525
-16
0
73 339
-16
-4 301
73 339
0
-4 301
0
0
-78 181
0
-78 181
-524 660
0
-524 660
-52
0
0
-52
-31 848
0
-366 988
-31 848
-125 772
-366 988
0
-125 772
0
0
-524 660
0
-524 660
671 678
0
671 678
4 611
0
0
4 611
49 742
0
469 936
49 742
147 389
469 936
0
147 389
0
0
671 678
0
671 678
Of which collateral
and financial
Of which collateral
guarantees received
and financial
on nonperforming
guarantees received
exposures with
on nonperforming
forbearance
exposures with
measures
forbearance
measures
294 761
0
294 761
0
0
0
0
49 447
0
221 074
49 447
24 239
221 074
0
24 239
0
0
294 761
0
294 761
(in thousands of Euros)
(in thousands of Euros)
Credit quality of performing and non-performing exposures by past due days
Credit quality of performing and non-performing exposures by past due days
Gross carrying amount/nominal amount
Credit quality of performing and non-performing exposures by past due days
Performing exposures
Gross carrying amount/nominal amount
Non-performing exposures
Cash in Central Banks
5 705 902
5 705 902
Performing exposures
Not past due or
past due < =30
days
Not past due or
past due < =30
days
Past due > 30
days <=90 days
Past due > 30
days <=90 days
23 027 830
5 705 902
0
23 027 830
380 732
0
50 909
380 732
294 155
50 909
11 518 652
294 155
6 743 662
11 518 652
10 783 382
6 743 662
9 467 651
10 783 382
0
9 467 651
6 142 095
0
693 578
6 142 095
710 489
693 578
1 921 489
710 489
1 921 489
0
170 355
0
0
170 355
0
0
0
0
24 570
0
103 419
24 570
56 959
103 419
42 365
56 959
0
42 365
0
0
0
0
0
0
0
0
0
0
0
38 201 383
170 355
23 198 185
5 705 902
0
23 198 185
380 732
0
50 909
380 732
318 725
50 909
11 622 071
318 725
6 800 621
11 622 071
10 825 747
6 800 621
9 467 651
10 825 747
0
9 467 651
6 142 095
0
693 578
6 142 095
710 489
693 578
1 921 489
710 489
8 062 905
1 921 489
0
8 062 905
36 776
0
560 030
36 776
75 163
560 030
6 306 918
75 163
1 084 018
6 306 918
46 434 643
1 084 018
Unlikely to pay
that are not past
due or are past
Unlikely to pay
due <=90 days
that are not past
due or are past
due <=90 days
0
Past due >
90 days
<=180 days
Past due >
90 days
<=180 days
0
Non-performing exposures
Past due >
180 days
<=1 year
Past due >
180 days
<=1 year
Past due > 1
year <= 2
years
Past due > 1
year <= 2
years
Past due > 2
years >=5
years
Past due > 2
years >=5
years
Past due > 5
years >=7
years
Past due > 5
years >=7
years
Past due > 7
years
Past due > 7
years
0
0
0
0
0
1 260 055
0
0
1 260 055
52
0
0
52
79 049
0
904 272
79 049
585 363
904 274
276 681
585 363
197 797
276 681
0
197 797
0
0
0
0
0
0
197 797
0
197 797
55 493
0
0
55 493
0
0
0
0
1
0
40 532
1
35 646
40 532
14 960
35 646
0
14 960
0
0
0
0
0
0
0
0
0
0
62 104
0
0
62 104
1 250
0
0
1 250
247
0
40 568
247
36 691
40 568
20 039
36 691
0
20 039
0
0
0
0
0
0
0
0
0
0
89 584
0
0
89 584
0
0
0
0
17
0
71 931
17
11 546
71 931
17 636
11 546
15 179
17 636
0
15 179
0
0
0
0
0
0
15 179
0
125 799
0
0
125 799
410
0
0
410
9 015
0
106 134
9 015
64 644
106 134
10 240
64 644
39 534
10 240
0
39 534
0
0
0
0
20 420
0
19 114
20 420
77 292
0
0
77 292
0
0
0
0
2 901
0
69 273
2 901
48 516
69 273
5 118
48 516
84 825
5 118
0
84 825
0
0
0
0
2 350
0
82 475
2 350
96 751
0
0
96 751
0
0
0
0
7 611
0
71 820
7 611
56 411
71 820
17 319
56 411
0
17 319
0
0
0
0
0
0
0
0
0
0
0
0
15 179
19 114
82 475
0
1 457 852
55 493
62 104
104 763
165 333
162 117
96 751
0
1 602 252
0
0
1 767 078
1 712
0
0
1 712
63 800
0
1 175 991
98 841
739 398
1 304 531
360 748
838 818
337 335
361 993
0
337 335
0
0
0
0
22 770
0
314 565
22 770
454 376
314 565
0
454 376
0
0
259
0
8 878
259
442 894
8 878
2 345
442 894
2 393 963
2 345
Of which
defaulted
Of which
defaulted
0
1 765 833
0
0
1 765 833
1 712
0
0
1 712
98 841
0
1 304 531
98 841
838 818
1 304 531
360 748
838 818
337 335
360 748
0
337 335
0
0
0
0
22 770
0
314 565
22 770
454 376
314 565
0
454 376
0
0
259
0
8 878
259
442 894
8 878
2 345
442 894
2 557 543
2 345
Loans and advances
Cash in Central Banks
Central banks
Loans and advances
General governments
Central banks
Credit institutions
General governments
Other financial corporations
Credit institutions
Non-financial corporations
Other financial corporations
Of which SMEs
Non-financial corporations
Households
Of which SMEs
Debt securities
Households
Central banks
Debt securities
General governments
Central banks
Credit institutions
General governments
Other financial corporations
Credit institutions
Non-financial corporations
Other financial corporations
Off-balance-sheet exposures
Non-financial corporations
Central banks
Off-balance-sheet exposures
General governments
Central banks
Credit institutions
General governments
Other financial corporations
Credit institutions
Non-financial corporations
Other financial corporations
Households
Non-financial corporations
Total
Households
Total
46 434 643
38 201 383
170 355
2 558 788
1 457 852
55 493
62 104
104 763
165 333
162 117
96 751
2 557 543
310
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 139 -
- 141 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Performing and non-performing exposures and related provisions
Performing and non-performing exposures and related provisions
Performing and non-performing exposures and related provisions
Gross carrying amount/nominal amount
Accumulated impairment, accumulated negative changes in fair value due to credit risk
and provisions
Performing exposures – accumulated
impairment and provisions
Non-performing exposures – accumulated
Accumulated impairment, accumulated negative changes in fair value due to credit risk
impairment, accumulated negative changes
and provisions
in fair value due to credit risk and
provisions
Non-performing exposures – accumulated
impairment, accumulated negative changes
Das quais,
in fair value due to credit risk and
Stage 2
provisions
Performing exposures – accumulated
Das quais,
impairment and provisions
Stage 1
Das quais,
Stage 3
Das quais,
Stage 2
Das quais,
Stage 2
Cash in Central Banks
Loans and advances
Central banks
Cash in Central Banks
General governments
Loans and advances
Credit institutions
Central banks
Other financial corporations
General governments
Non-financial corporations
Credit institutions
Of which SMEs
Other financial corporations
Households
Non-financial corporations
Debt securities
Of which SMEs
Central banks
Households
General governments
Debt securities
Credit institutions
Central banks
Other financial corporations
General governments
Non-financial corporations
Credit institutions
Off-balance-sheet exposures
Other financial corporations
Central banks
Non-financial corporations
General governments
Off-balance-sheet exposures
Credit institutions
Central banks
Other financial corporations
General governments
Non-financial corporations
Credit institutions
Households
Other financial corporations
Total
Non-financial corporations
Performing exposures
Gross carrying amount/nominal amount
Non-performing exposures
Of which
Performing exposures
stage 1
Of which
stage 2
Of which
Non-performing exposures
stage 2
Of which
stage 3
5 705 902
5 705 902
0
0
23 198 185
0
5 705 902
380 732
23 198 185
50 909
0
318 725
380 732
11 622 071
50 909
6 800 621
318 725
10 825 747
11 622 071
9 467 651
6 800 621
0
10 825 747
6 142 095
9 467 651
693 578
0
710 489
6 142 095
1 921 489
693 578
8 062 905
710 489
0
1 921 489
36 776
8 062 905
560 030
0
75 163
36 776
6 306 918
560 030
1 084 018
75 163
46 434 643
6 306 918
Of which
18 759 615
stage 1
0
5 705 902
361 649
18 759 615
44 232
0
256 309
361 649
8 290 059
44 232
4 972 144
256 309
9 807 366
8 290 059
9 292 175
4 972 144
0
9 807 366
6 142 095
9 292 175
693 578
0
707 452
6 142 095
1 749 050
693 578
6 807 794
707 452
0
1 749 050
35 558
6 807 794
515 342
0
56 832
35 558
5 132 767
515 342
1 067 295
56 832
40 565 486
5 132 767
4 436 886
Of which
stage 2
0
0
19 083
4 436 886
6 677
0
62 417
19 083
3 332 012
6 677
1 828 477
62 417
1 018 381
3 332 012
175 476
1 828 477
0
1 018 381
0
175 476
0
0
3 037
0
172 439
0
1 255 111
3 037
0
172 439
1 218
1 255 111
44 688
0
18 331
1 218
1 174 151
44 688
16 723
18 331
5 869 157
1 174 151
1 767 078
0
0
1 712
1 767 078
0
0
98 841
1 712
1 304 531
0
838 818
98 841
361 993
1 304 531
337 335
838 818
0
361 993
0
337 335
0
0
22 770
0
314 565
0
454 376
22 770
0
314 565
0
454 376
259
0
8 878
0
442 894
259
2 345
8 878
2 558 788
442 894
Of which
stage 2
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2 378
0
0
0
0
2 378
0
0
0
0
2 378
0
0
0
0
2 378
0
0
0
0
0
0
0
0
0
0
2 378
0
0
1 767 078
Of which
stage 3
0
0
1 712
1 767 078
0
0
98 841
1 712
1 304 531
0
838 818
98 841
361 993
1 304 531
334 957
838 818
0
361 993
0
334 957
0
0
22 770
0
312 187
0
454 376
22 770
0
312 187
0
454 376
259
0
8 878
0
442 894
259
2 345
8 878
2 556 410
442 894
0
0
0
0
-386 911
0
0
-1 604
-386 911
-1 113
0
-9 403
-1 604
-324 005
-1 113
-148 357
-9 403
-50 786
-324 005
-47 470
-148 357
0
-50 786
-3 586
-47 470
-248
0
-1 493
-3 586
-42 143
-248
19 197
-1 493
0
-42 143
34
19 197
229
0
128
34
14 634
229
4 172
128
-415 068
14 634
Das quais,
Stage 1
-64 245
0
0
-529
-64 245
-659
0
-1 435
-529
-46 258
-659
-31 287
-1 435
-15 364
-46 258
-9 187
-31 287
0
-15 364
-3 586
-9 187
-248
0
-1 105
-3 586
-4 248
-248
8 046
-1 105
0
-4 248
11
8 046
19
0
44
11
4 097
19
3 875
44
-65 386
4 097
Das quais,
Stage 2
-322 667
0
0
-1 075
-322 667
-454
0
-7 968
-1 075
-277 747
-454
-117 070
-7 968
-35 422
-277 747
-38 283
-117 070
0
-35 422
0
-38 283
0
0
-388
0
-37 895
0
11 151
-388
0
-37 895
23
11 151
210
0
84
23
10 537
210
296
84
-349 799
10 537
-879 346
0
0
-1 712
-879 346
0
0
-36 277
-1 712
-656 232
0
-403 428
-36 277
-185 125
-656 232
-203 243
-403 428
0
-185 125
0
-203 243
0
0
0
0
-203 243
0
73 150
0
0
-203 243
0
73 150
0
0
3 295
0
69 684
0
171
3 295
-1 009 439
69 684
Households
1 084 018
1 067 295
16 723
2 345
0
2 345
4 172
3 875
296
171
Total
Quality of non-productive exhibitions by geography
40 565 486
46 434 643
5 869 157
2 558 788
2 378
2 556 410
-415 068
-65 386
-349 799
-1 009 439
(in thousands of Euros)
Collateral and financial
guarantees received
(in thousands of Euros)
Collateral and financial
On non-
guarantees received
performing
exposures
On
performing
exposures
On
performing
exposures
0
On non-
performing
exposures
0
Accumulated
partial write-
off
Accumulated
partial write-
off
0
-429 807
13 448 418
0
0
0
-429 807
0
0
-186 642
0
-242 416
0
-80 112
-186 642
-749
-242 416
0
-80 112
0
-749
0
0
0
0
0
0
0
0
0
0
-429 807
0
0
35 935
13 448 418
0
0
172 277
35 935
3 374 095
0
2 465 189
172 277
9 866 111
3 374 095
0
2 465 189
0
9 866 111
0
0
0
0
0
0
0
0
169 155
0
0
0
4 266
169 155
6 114
0
8 871
4 266
138 886
6 114
11 018
8 871
13 617 573
138 886
571 191
0
0
0
571 191
0
0
51 324
0
367 616
0
255 987
51 324
151 726
367 616
0
255 987
0
151 726
0
0
0
0
0
0
0
0
14 705
0
0
0
0
14 705
43
0
0
0
14 602
43
61
0
585 896
14 602
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Das quais,
Stage 3
-879 346
0
0
-1 712
-879 346
0
0
-36 277
-1 712
-656 232
0
-403 428
-36 277
-185 125
-656 232
-203 243
-403 428
0
-185 125
0
-203 243
0
0
0
0
-203 243
0
73 150
0
0
-203 243
0
73 150
0
0
3 295
0
69 684
0
171
3 295
-1 009 439
69 684
Quality of non-productive exhibitions by geography
Quality of non-productive exhibitions by geography
Gross carrying amount/nominal amount
Gross carrying amount/nominal amount
Of which non-performing
Of which
Of which non-performing
defaulted
On-balance-sheet exposures
Portugal
On-balance-sheet exposures
Other countries
Portugal
Off-balance-sheet exposures
Other countries
Portugal
Off-balance-sheet exposures
Other countries
Portugal
Total
Other countries
Total
Of which subject
to impairment
Of which subject
to impairment
34 715 288
26 469 514
34 715 288
8 245 774
26 469 514
8 245 774
Accumulated
impairment
Accumulated
impairment
-1 516 971
-1 373 740
-1 516 971
-143 231
-1 373 740
-143 231
34 715 288
-1 516 971
34 770 248
2 104 413
26 482 718
1 909 643
34 770 248
8 287 530
2 104 413
194 769
26 482 718
8 517 281
1 909 643
454 376
8 287 530
7 996 918
8 517 281
520 363
194 769
452 231
454 376
2 145
7 996 918
43 287 529
452 231
2 558 788
520 363
2 145
2 104 413
Of which
defaulted
1 909 643
2 104 413
194 769
1 909 643
454 376
194 769
452 231
454 376
2 145
452 231
2 558 788
2 145
43 287 529
2 558 788
2 558 788
34 715 288
-1 516 971
0
0
171
11 018
61
-1 009 439
-429 807
13 617 573
585 896
(in thousands of Euros)
Provisions on off-
balance-sheet
commitments and
Provisions on off-
financial guarantees
balance-sheet
given
commitments and
financial guarantees
given
Accumulated negative
(in thousands of Euros)
changes in fair value
due to credit risk on
Accumulated negative
non-performing
changes in fair value
exposures
due to credit risk on
non-performing
exposures
0
92 347
90 100
92 347
2 247
90 100
92 347
2 247
92 347
0
0
0
0
0
0
0
311
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 140 -
- 140 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Credit quality of loans and advances by industry
Credit quality of loans and advances by industry
(in thousands of Euros)
Total
Human health services and social work activities
12 926 603
246 636
1 304 531
40 994
1 304 531
40 994
12 926 303
246 636
Arts, entertainment and recreation
Other services
Collateral valuation – loans and advances
Total
Collateral valuation – loans and advances
Collateral valuation – loans and advances
223 680
148 241
92 649
31 215
92 649
31 215
223 680
148 241
12 926 603
1 304 531
1 304 531
Loans and advances
12 926 303
Performing
Non-performing
Gross carrying amount
Of which non-performing
Gross carrying amount
Of which
defaulted
Of which non-performing
8 738
8 738
Of which loans
and advances
subject to
impairment
Accumulated
impairment
140
Of which
defaulted
143 597
345 627
Of which loans
and advances
subject to
impairment
44 482
2 674 309
140
143 597
16 795
8 738
13 446
140
180 792
143 597
84 200
16 795
58 548
13 446
185 908
180 792
8 157
84 200
97 904
58 548
226 236
185 908
89 976
8 157
22 173
97 904
20
226 236
3 043
89 976
40 994
22 173
92 649
20
31 215
3 043
16 795
8 738
13 446
140
180 792
143 597
84 200
16 795
58 548
13 446
185 908
180 792
8 157
84 200
97 904
58 548
226 236
185 908
89 976
8 157
22 173
97 904
20
226 236
3 043
89 976
40 994
22 173
92 649
20
31 215
3 043
280 807
345 627
185 030
44 482
1 381 721
2 674 309
1 503 999
280 807
851 326
185 030
1 115 252
1 381 721
138 601
1 503 999
632 558
851 326
1 451 105
1 115 252
1 320 537
138 601
330 595
632 558
2 327
1 451 105
49 770
1 320 537
246 636
330 595
223 680
2 327
148 241
49 770
Accumulated negative
changes in fair value
due to credit risk on
(in thousands of Euros)
non-performing
exposures
Accumulated negative
changes in fair value
0
due to credit risk on
non-performing
exposures
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(in thousands of Euros)
0
Accumulated
impairment
-11 945
-459
-107 323
-4 043
-11 945
-9 520
-459
-120 319
-107 323
-63 342
-4 043
-67 454
-9 520
-131 690
-120 319
-7 860
-63 342
-116 256
-67 454
-131 685
-131 690
-68 732
-7 860
-23 933
-116 256
-46
-131 685
-1 820
-68 732
-19 973
-23 933
-67 258
-46
-26 579
-1 820
-980 237
-19 973
-67 258
-26 579
-980 237
Unlikely to pay
that are not past
due or are past
due <= 90 days
1 260 055
Unlikely to pay
815 500
that are not past
due or are past
547 249
due <= 90 days
83 556
100 012
1 260 055
218 044
815 500
-354 076
547 249
83 556
393 125
100 012
330 073
218 044
690 295
-354 076
327 083
12 397
393 125
-40
330 073
690 295
327 083
12 397
507 022
296 112
261 024
57 218
8 755
507 022
93 675
296 112
-126 193
261 024
57 218
164 215
8 755
142 950
93 675
712 122
-126 193
222 071
911
164 215
-429 762
142 950
712 122
222 071
911
Past due > 90 days
(in thousands of Euros)
Loans and advances
Of which past
due >90 days
<= 180 days
Of which:
past due >
180 days <= 1
Non-performing
year
Of which:
past due > 1
years <= 2
years
Of which:
past due > 2
years <= 5
years
Of which:
past due > 5
years
55 493
62 104
Past due > 90 days
89 584
125 799
77 292
38 449
Of which past
37 050
due >90 days
<= 180 days
41 123
Of which:
past due >
40 544
180 days <= 1
year
53 775
Of which:
past due > 1
52 111
years <= 2
years
68 459
Of which:
past due > 2
54 518
years <= 5
years
21 971
Of which:
past due > 5
18 059
years
Of which:
past due > 7
years
96 751
72 335
Of which:
58 741
past due > 7
years
96 751
72 335
-30 908
58 741
41 178
29 145
260 704
-30 908
56 612
0
41 178
-105 511
29 145
125 799
68 459
-26 445
54 518
40 238
33 294
157 434
-26 445
23 870
4
40 238
-67 013
33 294
77 292
21 971
-7 183
18 059
13 213
11 714
133 936
-7 183
17 349
0
13 213
-253 864
11 714
55 493
38 449
-20 184
37 050
17 686
17 425
38 118
-20 184
18 822
500
17 686
0
17 425
38 118
18 822
500
0
62 104
41 123
-17 982
40 544
21 961
21 916
30 259
-17 982
29 316
307
21 961
-1 891
21 916
30 259
29 316
307
-1 891
89 584
53 775
-23 491
52 111
29 938
29 455
91 671
-23 491
76 103
100
29 938
-1 482
29 455
91 671
76 103
100
-1 482
Credit quality of loans and advances by industry
Agriculture, forestry and fishing
Mining and quarrying
Manufacturing
Electricity, gas, steam and air conditioning supply
Agriculture, forestry and fishing
Water supply
Mining and quarrying
Construction
Manufacturing
Wholesale and retail trade
Electricity, gas, steam and air conditioning supply
Transport and storage
Water supply
Accommodation and food service activities
Construction
Information and communication
Wholesale and retail trade
Financial and insurance activities
Transport and storage
Real estate activities
Accommodation and food service activities
Professional, scientific and technical activities
Information and communication
Administrative and support service activities
Financial and insurance activities
Public administration and defence, compulsory social security
Real estate activities
Education
Professional, scientific and technical activities
Human health services and social work activities
Administrative and support service activities
Arts, entertainment and recreation
Public administration and defence, compulsory social security
Other services
Education
345 627
44 482
2 674 309
280 807
345 627
185 030
44 482
1 381 721
2 674 309
1 503 999
280 807
851 326
185 030
1 115 252
1 381 721
138 601
1 503 999
632 558
851 326
1 451 105
1 115 252
1 320 537
138 601
330 595
632 558
2 327
1 451 105
49 770
1 320 537
246 636
330 595
223 680
2 327
148 241
49 770
Of which past
due > 30 days
<=90 days
Performing
24 965 262
23 198 185
170 355
1 767 078
16 121 730
15 010 118
13 664 886
12 856 614
Gross carrying amount
Of which secured
Of which secured with immovable property
Of which instruments with LTV higher than 60% and lower or equal to 80%
2 630 165
2 489 391
Gross carrying amount
Of which instruments with LTV higher than 80% and lower or equal to 100%
Of which instruments with LTV higher than 100%
Of which secured
Accumulated impairment for secured assets
Of which secured with immovable property
Collateral
Of which instruments with LTV higher than 60% and lower or equal to 80%
Of which value capped at the value of exposure
Of which instruments with LTV higher than 80% and lower or equal to 100%
Of which immovable property
Of which instruments with LTV higher than 100%
Of which value above the cap
Accumulated impairment for secured assets
Of which immovable property
Collateral
Financial guarantees received
Of which value capped at the value of exposure
Accumulated partial write-off
Of which immovable property
Of which value above the cap
687 067
24 965 262
868 813
16 121 730
-706 396
13 664 886
2 630 165
13 969 255
687 067
12 882 506
868 813
24 580 690
-706 396
16 973 310
50 354
13 969 255
-429 807
12 882 506
578 300
23 198 185
557 094
15 010 118
-226 127
12 856 614
2 489 391
13 411 915
578 300
12 409 483
557 094
23 178 272
-226 127
16 424 156
37 047
13 411 915
-5
12 409 483
24 580 690
23 178 272
52 585
Of which past
52 509
due > 30 days
<=90 days
170 355
52 585
-3 094
52 509
48 591
48 530
55 348
-3 094
55 036
5
48 591
-5
48 530
55 348
1 111 612
808 272
140 774
108 767
1 767 078
311 720
1 111 612
-480 269
808 272
140 774
557 340
108 767
473 023
311 720
1 402 417
-480 269
549 154
13 308
557 340
-429 802
473 023
1 402 417
Of which immovable property
Changes in the stock of non-performing loans and advances
Financial guarantees received
50 354
37 047
5
16 973 310
16 424 156
55 036
549 154
13 308
Accumulated partial write-off
-429 807
-5
-5
-429 802
-40
-429 762
Changes in the stock of non-performing loans and advances
Initial stock of non-performing loans and advances
Inflows to non-performing portfolios
Outflows from non-performing portfolios
Initial stock of non-performing loans and advances
Outflow to performing portfolio
Inflows to non-performing portfolios
Outflow due to loan repayment, partial or total
Outflows from non-performing portfolios
Outflow due to collateral liquidation
Outflow to performing portfolio
Outflow due to taking possession of collateral
Outflow due to loan repayment, partial or total
Outflow due to sale of instruments
Outflow due to collateral liquidation
Outflow due to risk transfer
Outflow due to taking possession of collateral
Outflow due to write-off
Outflow due to sale of instruments
Outflow due to other situations
Outflow due to risk transfer
Outflow due to reclassification as held for sale
Outflow due to write-off
Final stock of non-performing loans and advances
Outflow due to other situations
Outflow due to reclassification as held for sale
Final stock of non-performing loans and advances
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
157 434
133 936
260 704
23 870
17 349
56 612
0
4
(in thousands of Euros)
0
-67 013
-253 864
-105 511
312
Gross carrying
amount
(in thousands of Euros)
2 512 984
Gross carrying
amount
484 303
-1 230 209
2 512 984
-58 875
484 303
-194 938
-1 230 209
0
-58 875
-21 739
-194 938
-380 535
-21 739
-432 517
-380 535
-41 668
-432 517
1 767 078
-41 668
0
0
0
0
0
1 767 078
- 141 -
- 141 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Credit quality of loans and advances by industry
Electricity, gas, steam and air conditioning supply
Agriculture, forestry and fishing
Mining and quarrying
Manufacturing
Water supply
Construction
Wholesale and retail trade
Transport and storage
Accommodation and food service activities
Information and communication
Financial and insurance activities
Real estate activities
Professional, scientific and technical activities
Administrative and support service activities
Human health services and social work activities
Arts, entertainment and recreation
Education
Other services
Total
Public administration and defence, compulsory social security
Collateral valuation – loans and advances
Gross carrying amount
Of which non-performing
Of which loans
and advances
subject to
impairment
Accumulated
impairment
Of which
defaulted
(in thousands of Euros)
Accumulated negative
changes in fair value
due to credit risk on
non-performing
exposures
345 627
44 482
2 674 309
280 807
185 030
1 381 721
1 503 999
851 326
1 115 252
138 601
632 558
1 451 105
1 320 537
330 595
2 327
49 770
246 636
223 680
148 241
8 738
140
143 597
16 795
13 446
180 792
84 200
58 548
185 908
8 157
97 904
226 236
89 976
22 173
20
3 043
40 994
92 649
31 215
8 738
140
143 597
16 795
13 446
180 792
84 200
58 548
185 908
8 157
97 904
226 236
89 976
22 173
20
3 043
40 994
92 649
31 215
345 627
44 482
2 674 309
280 807
185 030
1 381 721
1 503 999
851 326
1 115 252
138 601
632 558
1 451 105
1 320 537
330 595
2 327
49 770
246 636
223 680
148 241
-11 945
-459
-107 323
-4 043
-9 520
-120 319
-63 342
-67 454
-131 690
-7 860
-116 256
-131 685
-68 732
-23 933
-46
-1 820
-19 973
-67 258
-26 579
12 926 603
1 304 531
1 304 531
12 926 303
-980 237
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Performing
Non-performing
Loans and advances
(in thousands of Euros)
Of which past
due > 30 days
<=90 days
Unlikely to pay
that are not past
due or are past
due <= 90 days
Past due > 90 days
Of which past
due >90 days
<= 180 days
Of which:
Of which:
Of which:
Of which:
past due >
past due > 1
past due > 2
past due > 5
180 days <= 1
years <= 2
years <= 5
year
years
years
years
Of which:
past due > 7
years
55 493
38 449
37 050
62 104
41 123
40 544
89 584
53 775
52 111
125 799
68 459
54 518
77 292
21 971
18 059
96 751
72 335
58 741
Gross carrying amount
Of which secured
Of which secured with immovable property
Of which instruments with LTV higher than 60% and lower or equal to 80%
2 630 165
2 489 391
Of which instruments with LTV higher than 80% and lower or equal to 100%
Of which instruments with LTV higher than 100%
687 067
868 813
578 300
557 094
24 965 262
23 198 185
170 355
1 767 078
1 260 055
16 121 730
15 010 118
13 664 886
12 856 614
52 585
52 509
1 111 612
808 272
140 774
108 767
311 720
815 500
547 249
83 556
100 012
218 044
507 022
296 112
261 024
57 218
8 755
93 675
Accumulated impairment for secured assets
-706 396
-226 127
-3 094
-480 269
-354 076
-126 193
-20 184
-17 982
-23 491
-26 445
-7 183
-30 908
Collateral
Of which value capped at the value of exposure
Of which immovable property
Of which value above the cap
Of which immovable property
Financial guarantees received
Accumulated partial write-off
13 969 255
13 411 915
12 882 506
12 409 483
24 580 690
23 178 272
16 973 310
16 424 156
50 354
-429 807
37 047
-5
48 591
48 530
55 348
55 036
5
-5
557 340
473 023
1 402 417
549 154
13 308
-429 802
393 125
330 073
690 295
327 083
12 397
164 215
142 950
712 122
222 071
911
-40
-429 762
17 686
17 425
38 118
18 822
500
0
21 961
21 916
30 259
29 316
307
-1 891
29 938
29 455
91 671
76 103
100
-1 482
40 238
33 294
13 213
11 714
41 178
29 145
157 434
133 936
260 704
23 870
17 349
56 612
4
0
0
-67 013
-253 864
-105 511
Changes in the stock of non-performing loans and advances
Changes in the stock of non-performing loans and advances
Initial stock of non-performing loans and advances
Inflows to non-performing portfolios
Outflows from non-performing portfolios
Outflow to performing portfolio
Outflow due to loan repayment, partial or total
Outflow due to collateral liquidation
Outflow due to taking possession of collateral
Outflow due to sale of instruments
Outflow due to risk transfer
Outflow due to write-off
Outflow due to other situations
Outflow due to reclassification as held for sale
Final stock of non-performing loans and advances
(in thousands of Euros)
Gross carrying
amount
2 512 984
484 303
-1 230 209
-58 875
-194 938
0
-21 739
-380 535
0
-432 517
-41 668
0
1 767 078
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 141 -
Collateral obtained by taking possession and execution processes
Collateral obtained by taking possession and execution processes
Property, plant and equipment (PP&E)
Other than PP&E
Residential immovable property
Commercial Immovable property
Movable property (auto, shipping, etc.)
Equity and debt instruments
Other
Total
(in thousands of Euros)
Collateral obtained by taking possession
Value at initial recognition
Accumulated negative
changes
0
442 520
100 227
247 005
3 189
64 706
27 394
442 520
0
-205 141
-28 394
-152 969
-2 180
-10 576
-11 022
-205 141
Collateral obtained by taking possession and execution processes – vintage breakdown
Total collateral obtained by taking possession
Foreclosed <=2 years
Foreclosed > 2 years <=5 years
Foreclosed > 5 years
(in thousands of Euros)
Of which non-current assets held-
for-sale
Value at initial
recognition
Accumulated
negative
changes
Value at initial
recognition
Accumulated
negative
changes
Value at initial
recognition
Accumulated
negative
changes
Value at initial
recognition
Accumulated
negative
changes
Value at initial
recognition
Accumulated
negative
changes
Collateral obtained by taking possession classified as PP&E
0
0
Collateral obtained by taking possession other than that classified as PP&E
442 520
-205 141
75 251
-17 487
110 943
-64 971
256 325
-122 684
Residential immovable property
100 227
-28 394
11 229
-1 133
26 948
-6 716
62 050
-20 545
Commercial immovable property
247 005
-152 969
20 644
-1 267
73 208
-51 550
153 152
-100 152
Movable property (auto, shipping, etc.)
3 189
-2 180
1 142
-194
2 047
-1 987
Equity and debt instruments
64 706
-10 576
14 843
-3 871
10 787
-6 705
39 076
Other
Total
27 394
-11 022
27 394
-11 022
0
442 520
-205 141
75 251
-17 487
110 943
-64 971
256 325
-122 684
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1 832
670
16 090
18 592
6 803
193
928
7 924
26 516
NOTE 46 –INSURANCE AND REINSURANCE MEDIATION SERVICES
As of December 31, 2021 and 2020, the compensation arising from the provision of insurance or reinsurance mediation services has
the following composition:
(in thousands of Euros)
31.12.2021
31.12.2020
Life Insurance
Unit Link and other life commissions
Credit protection insurance (life)
Traditional Products
Non-Life Insurance
Personal lines insurance
Corporate insurance
Credit protection insurance (non-life)
Note: the income presented is net of accruals
1 828
841
15 672
18 341
7 593
178
2 274
10 045
28 386
The Group does not collect insurance premiums on behalf of the Insurers, nor does it move funds relating to insurance contracts.
Accordingly, there are no other assets, liabilities, income or charges to be reported relating to the insurance mediation business
carried on by the Group, other than those already disclosed.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 142 -
313
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Collateral obtained by taking possession and execution processes
Collateral obtained by taking possession and execution processes
Property, plant and equipment (PP&E)
Other than PP&E
Property, plant and equipment (PP&E)
Residential immovable property
Other than PP&E
Commercial Immovable property
Residential immovable property
Movable property (auto, shipping, etc.)
Commercial Immovable property
Equity and debt instruments
Movable property (auto, shipping, etc.)
Other
Equity and debt instruments
Total
Other
Total
(in thousands of Euros)
Collateral obtained by taking possession
(in thousands of Euros)
Accumulated negative
Value at initial recognition
Collateral obtained by taking possession
changes
Value at initial recognition
Accumulated negative
changes
0
0
442 520
100 227
442 520
247 005
100 227
3 189
247 005
64 706
3 189
27 394
64 706
442 520
27 394
442 520
0
0
-205 141
-28 394
-205 141
-152 969
-28 394
-2 180
-152 969
-10 576
-2 180
-11 022
-10 576
-205 141
-11 022
-205 141
Collateral obtained by taking possession and execution processes – vintage breakdown
Collateral obtained by taking possession and execution processes – vintage breakdown
Collateral obtained by taking possession and execution processes – vintage breakdown
Total collateral obtained by taking possession
Foreclosed <=2 years
Foreclosed > 2 years <=5 years
Foreclosed > 5 years
(in thousands of Euros)
Of which non-current assets held-
(in thousands of Euros)
for-sale
Collateral obtained by taking possession classified as PP&E
Collateral obtained by taking possession other than that classified as PP&E
Collateral obtained by taking possession classified as PP&E
Residential immovable property
Collateral obtained by taking possession other than that classified as PP&E
Commercial immovable property
Residential immovable property
Movable property (auto, shipping, etc.)
Commercial immovable property
Equity and debt instruments
Movable property (auto, shipping, etc.)
Other
Equity and debt instruments
Total
Other
Value at initial
recognition
Value at initial
recognition
0
442 520
0
100 227
442 520
247 005
100 227
3 189
247 005
64 706
3 189
27 394
64 706
442 520
27 394
Accumulated
negative
changes
Accumulated
0
negative
changes
-205 141
0
-28 394
-205 141
-152 969
-28 394
-2 180
-152 969
-10 576
-2 180
-11 022
-10 576
-205 141
-11 022
Value at initial
recognition
Foreclosed <=2 years
Total collateral obtained by taking possession
Accumulated
negative
changes
Accumulated
negative
Foreclosed > 2 years <=5 years
changes
Value at initial
recognition
Value at initial
recognition
Foreclosed > 5 years
Accumulated
negative
changes
Value at initial
recognition
Of which non-current assets held-
for-sale
Accumulated
negative
changes
Value at initial
recognition
75 251
11 229
75 251
20 644
11 229
1 142
20 644
14 843
1 142
27 394
14 843
75 251
27 394
Accumulated
negative
changes
-17 487
-1 133
-17 487
-1 267
-1 133
-194
-1 267
-3 871
-194
-11 022
-3 871
-17 487
-11 022
Value at initial
recognition
110 943
26 948
110 943
73 208
26 948
0
73 208
10 787
0
0
10 787
110 943
0
Accumulated
negative
changes
-64 971
-6 716
-64 971
-51 550
-6 716
0
-51 550
-6 705
0
0
-6 705
-64 971
0
Value at initial
recognition
256 325
62 050
256 325
153 152
62 050
2 047
153 152
39 076
2 047
0
39 076
256 325
0
Accumulated
negative
changes
-122 684
Value at initial
recognition
-20 545
-122 684
-100 152
-20 545
-1 987
-100 152
0
-1 987
0
0
-122 684
0
Accumulated
negative
changes
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Total
442 520
-205 141
75 251
-17 487
110 943
-64 971
256 325
-122 684
NOTE 46 –INSURANCE AND REINSURANCE
MEDIATION SERVICES
NOTE 46 –INSURANCE AND REINSURANCE MEDIATION SERVICES
As of December 31, 2021 and 2020, the compensation arising from the provision of insurance or
reinsurance mediation services has the following composition:
As of December 31, 2021 and 2020, the compensation arising from the provision of insurance or reinsurance mediation services has
NOTE 46 –INSURANCE AND REINSURANCE MEDIATION SERVICES
the following composition:
As of December 31, 2021 and 2020, the compensation arising from the provision of insurance or reinsurance mediation services has
(in thousands of Euros)
the following composition:
31.12.2021
31.12.2020
(in thousands of Euros)
Life Insurance
Life Insurance
Unit Link and other life commissions
Credit protection insurance (life)
Unit Link and other life commissions
Traditional Products
Credit protection insurance (life)
Traditional Products
Non-Life Insurance
Non-Life Insurance
Personal lines insurance
Corporate insurance
Personal lines insurance
Credit protection insurance (non-life)
Corporate insurance
Credit protection insurance (non-life)
Note: the income presented is net of accruals
31.12.2021
1 828
841
1 828
15 672
841
18 341
15 672
18 341
7 593
178
7 593
2 274
178
10 045
2 274
28 386
10 045
31.12.2020
1 832
670
1 832
16 090
670
18 592
16 090
18 592
6 803
193
6 803
928
193
7 924
928
26 516
7 924
28 386
26 516
The Group does not collect insurance premiums on behalf of the Insurers, nor does it move funds relating to insurance contracts.
Note: the income presented is net of accruals
Accordingly, there are no other assets, liabilities, income or charges to be reported relating to the insurance mediation business
The Group does not collect insurance premiums on behalf of the Insurers, nor does it move funds relating to insurance contracts.
carried on by the Group, other than those already disclosed.
Accordingly, there are no other assets, liabilities, income or charges to be reported relating to the insurance mediation business
carried on by the Group, other than those already disclosed.
The Group does not collect insurance premiums on behalf of the Insurers, nor does it move funds
relating to insurance contracts. Accordingly, there are no other assets, liabilities, income or charges to
be reported relating to the insurance mediation business carried on by the Group, other than those
already disclosed.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 142 -
- 142 -
314
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 47 - SUBSEQUENT EVENTS
As provided for in the agreements between the Resolution Fund and the shareholder Lone Star, on February 24, 2022, the
Resolution Fund transferred ownership of shares to Nani Holdings as a result of the capital increase by conversion of the
conversion rights so that Nani Holdings' shareholding in the Bank would remain at 75%, and the Resolution Fund's
shareholding was diluted to 23.44%.
NOTE 47 - SUBSEQUENT EVENTS
• As provided for in the agreements between the Resolution Fund and the shareholder Lone Star, on
February 24, 2022, the Resolution Fund transferred ownership of shares to Nani Holdings as a result
of the capital increase by conversion of the conversion rights so that Nani Holdings’ shareholding
in the Bank would remain at 75%, and the Resolution Fund’s shareholding was diluted to 23.44%.
On February 24, 2022, the Russian Federation began a military operation on the territory of Ukraine, which triggered a war
that currently involves three countries (Russia, Ukraine and Belarus). In response, various sanctions were approved with the
aim of impacting on the Russian economy, and also that of Belarus, by a group of countries, including NATO countries, the
European Union and others. There is a possibility that novobanco could be impacted by losses in the assets exposed to
those countries as a result of those sanctions, as well as the destruction that is taking place in Ukraine as a result of the war.
The exposure of novobanco as of December 31, 2021, by type of asset and country is presented as follows:
• On February 24, 2022, the Russian Federation began a military operation on the territory of Ukraine,
which triggered a war that currently involves three countries (Russia, Ukraine and Belarus). In
response, various sanctions were approved with the aim of impacting on the Russian economy,
and also that of Belarus, by a group of countries, including NATO countries, the European Union
and others. There is a possibility that novobanco could be impacted by losses in the assets exposed
to those countries as a result of those sanctions, as well as the destruction that is taking place in
Ukraine as a result of the war. The exposure of novobanco as of December 31, 2021, by type of asset
and country is presented as follows:
Russian Federation
Belarus
Ukraine
Total
31.12.2021
(in thousands of Euros)
Loans and advances to customers
Securities
Bonds recorded at fair value through other comprehensive income
Bonds recorded at amortised cost
Total Assets
5 049
43 140
22 744
20 396
48 189
209
938
-
-
-
-
-
-
209
938
6196
43 140
22 744
20 396
49 336
315
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- 145 -
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Separate
Financial Statements
316
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes CASH FLOW STATEMENT FOR THE YEARS ENDED ON 2021 AND 2020
NOVO BANCO, S.A.
CASH FLOW STATEMENT
FOR THE YEARS ENDED ON 2021 AND 2020
Cash flows from operatins activities
Interest received
Interest paid
Fees and commissions received
Fees and commissions paid
Recoveries on loans previously written off
Contributions to the pension fund
Cash contributions to resolution funds and deposit guarantee schemes
Cash payments to employees and suppliers
Changes in operating assets and liabilities:
Deposits with / from Central Banks
Financial assets mandatorily at fair value through profit or loss
Financial assets designated at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Financial assets at amortised cost
Securities
Loans and advances to banks
Loans and advances to customers
Financial liabilities at amortised cost
Deposits from banks
Due to customers
Derivatives - Hedge accounting
Other operating assets and liabilities
Net cash from operating activities before income tax
Corporate income taxes paid
Net cash from operating activities
Cash flows from investing activities
Sale of investments in subsidiaries and associated companies
Dividends received
Acquisition of tangible fixed assets
Sale of tangible fixed assets
Acquisition of intangible assets
Net cash from investing activities
Cash flows from financing activities
Contingent Capital Agreement
Emissão de obrigações e outros passivos titulados
Reimbursement of bonds and other debt securities
Net cash from financing activities
Net changes in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Net changes in cash and cash equivalents
Cash and cash equivalents at the end of the period
Cash and cash equivalents include:
Cash
Deposits with Central Banks
(of which, Restricted balances)
Deposits with banks
Total
(in thousands of Euros)
31.12.2021
31.12.2020
689 622
( 160 639)
287 013
( 40 296)
26 310
( 84 735)
( 40 172)
( 314 871)
741 134
( 239 631)
279 878
( 41 438)
29 596
( 266 833)
( 34 766)
( 358 667)
362 232
109 273
972 363
262 479
94 905
475 983
( 302 090)
( 26 501)
55 162
( 330 751)
1 624 592
405 818
1 218 774
( 2 438)
(1 161 671)
915 128
( 507 149)
191
804 356
500 648
( 511 297)
59 217
952 728
(2 837 350)
( 671 335)
(2 166 015)
( 3 017)
907 336
2 326 355
( 110 584)
( 33 557)
( 18 356)
2 292 798
( 128 940)
( 4)
18 400
( 116 630)
59 579
( 25 380)
-
16 928
( 43 398)
2 790
( 26 508)
( 64 035)
( 50 188)
429 013
575 000
( 84 916)
1 035 016
-
( 589)
919 097
1 034 427
3 147 860
855 299
2 261 646
1 406 347
3 147 860
855 299
5 409 506
2 261 646
20
20
20
144 220
5 264 629
( 264 955)
265 612
142 325
2 292 797
( 263 222)
89 746
5 409 506
2 261 646
3
The accompanying explanatory notes are an integral part of the separate financial statements.
The accompanying explanatory notes are an integral part of these separate financial statements
317
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
SEPARATE STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED 31 DECEMBER 2021 AND 2020
NOVO BANCO, S.A.
SEPARATE STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED 31 DECEMBER 2021 AND 2020
Net profit / (loss) for the year
Other comprehensive income/(loss)
Notes
31.12.2021
(in thousands of Euros)
31.12.2020
225 908
( 1 374 246)
Items that will not be reclassified to results
Actuarial gains / (losses) on defined benefit plans
Fair value changes of equity instruments measured at fair value through
other comprehensive income
Fair value changes of financial liabilities at fair value through profit or loss that is
attributable to changes in their credit risk
Items that may be reclassified to results
Financial assets at fair value through other comprehensive income
a)
a)
a)
a)
Total other comprehensive income/(loss) for the year
a) See Statement of Changes in Interim Equity
( 83 367)
( 75 649)
( 125 636)
( 122 199)
( 7 718)
( 14 320)
-
( 136 361)
( 136 361)
10 883
8 410
8 410
6 180
(1 491 472)
The accompanying explanatory notes are an integral part of these separate financial statements
The accompanying explanatory notes are an integral part of the separate financial statements.
318
4
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
SEPARATE BALANCE SHEET AS AT 31 DECEMBER 2021 AND 2020
NOVO BANCO, S.A.
SEPARATE BALANCE SHEET
AS AT 31 DECEMBER 2021 AND 2020
ASSETS
Cash, cash balances at central banks and other demand deposits
Financial assets held for trading
Non-trading financial assets mandatorily at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Financial assets at amortised cost
Debt securities
Loans and advances to Banks
Loans and advances to customers
Derivatives – Hedge accounting
Fair value changes of the hedged items in portfolio hedge of interest rate risk
Investments in subsidiaries, joint ventures and associates
Tangible assets
Property, Plant and Equipment
Intangible assets
Tax assets
Current Tax Assets
Deferred Tax Assets
Other assets
Non-current assets and disposal groups classified as held for sale
TOTAL ASSETS
LIABILITIES
Financial liabilities held for trading
Financial liabilities measured at amortised cost
Deposits from banks
(of which, Repurchase Agreement)
Due to customers
Debt securities issued, Subordinated debt and liabilities associated to transferred assets
Other financial liabilities
Derivatives – Hedge accounting
Provisions
Tax liabilities
Current Tax liabilities
Other liabilities
Liabilities included in disposal groups classified as held for sale
TOTAL LIABILITIES
EQUITY
Capital
Accumulated other comprehensive income
Retained earnings
Other reserves
Profit or loss attributable to Shareholders of the parent
TOTAL EQUITY
TOTAL LIABILITIES AND EQUITY
(in thousands of Euros)
Notes
31.12.2021
31.12.2020
20
21
22
22
22
23
23
24
25
26
27
28
29
21
30
23
31
27
32
29
33
34
34
34
5 674 461
377 709
2 250 308
7 133 508
24 977 300
2 893 829
186 089
21 897 382
20 150
28 787
241 066
231 419
231 419
67 515
776 769
35 448
741 321
2 555 852
6 601
2 524 868
655 327
2 445 605
7 813 584
24 804 483
2 873 753
245 472
21 685 258
13 606
60 976
189 924
188 968
188 968
48 331
771 854
-
771 854
2 956 010
1 568 912
44 341 445
44 042 448
305 512
40 346 362
11 497 829
1 529 847
26 997 858
1 479 066
371 609
44 460
478 170
4 703
4 703
362 836
-
554 343
37 895 984
10 778 468
1 625 724
25 778 507
974 996
364 013
72 543
438 572
5 536
5 536
314 611
2 007 770
41 542 043
41 289 359
6 054 907
( 968 987)
(8 576 860)
6 064 434
225 908
5 900 000
( 749 259)
(7 202 828)
6 179 422
(1 374 246)
2 799 402
2 753 089
44 341 445
44 042 448
The accompanying explanatory notes are an integral part of the separate financial statements.
The accompanying explanatory notes are an integral part of these separate financial statements
319
5
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
SEPARATE STATEMENT OF CHANGES IN EQUITY
FOR THE YEARS ENDED 31 DECEMBER 2021 AND 2020
NOVO BANCO, S.A.
SEPARATE STATEMENT OF CHANGES IN EQUITY
FOR THE YEARS ENDED 31 DECEMBER 2021 AND 2020
Notes
Share
Capital
Other
Comprehensive
Income
Retained
earnings
Other
reserves
Net
profit/(loss)
for the year
Total
(in thousands of Euros)
Balance as at 31 December 2019
5 900 000
( 632 033)
( 6 115 245)
5 580 864
( 1 087 584)
3 646 002
Other Increase / (Decrease) in Equity
Appropriation to retained earnings of net profit / (loss) of the previous year*
Reserve of Contingent Capital Agreement
Other movements
Total comprehensive income for the year
Changes in fair value, net of tax
Remeasurement of defined benefit plans, net of tax
Credit risk changes of financial liabilites at fair value, net of tax
Reserves of impairment of securities at fair value through OCI
Reserves of sales of securities at fair value through OCI
Net income of the year
34
34
15
34
34
34
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
( 117 226)
12 284
( 122 199)
10 883
( 1 838)
( 16 356)
-
( 1 087 583)
( 1 087 584)
-
1
-
-
-
-
-
-
-
598 558
-
596 315
2 243
-
-
-
-
-
-
-
1 087 584
1 087 584
-
-
( 1 374 246)
-
-
-
-
-
( 1 374 246)
598 559
-
596 315
2 244
( 1 491 472)
12 284
( 122 199)
10 883
( 1 838)
( 16 356)
( 1 374 246)
Balance as at 31 December 2020
5 900 000
( 749 259)
( 7 202 828)
6 179 422
( 1 374 246)
2 753 089
Balance as at 31 December 2020
5 900 000
( 749 259)
( 7 202 828)
6 179 422
( 1 374 246)
2 753 089
Capital increase by incorporation of special reserve for deferred taxes
33
154 907
-
-
( 154 907)
-
-
Other Increase / (Decrease) in Equity
Appropriation to retained earnings of net profit / (loss) of the previous year
Reserve of Contingent Capital Agreement
Other movements
Total comprehensive income for the year
Changes in fair value, net of tax
Remeasurement of defined benefit plans, net of tax
Reserves of impairment of securities at fair value through OCI
Reserves of sales of securities at fair value through OCI
Net profit / (loss) for the year
34
34
15
34
34
-
-
-
-
-
-
-
-
-
-
-
-
-
-
( 219 728)
( 134 562)
( 75 649)
1
( 9 518)
-
( 1 374 032)
( 1 374 246)
-
214
-
-
-
-
-
-
39 919
-
39 920
( 1)
-
-
-
-
-
-
1 374 246
1 374 246
-
-
225 908
-
-
-
-
225 908
40 133
-
39 920
213
6 180
( 134 562)
( 75 649)
1
( 9 518)
225 908
Balance as at 31 December 2021
6 054 907
( 968 987)
( 8 576 860)
6 064 434
225 908
2 799 402
The accompanying explanatory notes are an integral part of the separate financial statements.
The accompanying explanatory notes are an integral part of these separate financial statements
320
6
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
CASH FLOW STATEMENT FOR THE YEARS ENDED ON 2021 AND 2020
NOVO BANCO, S.A.
CASH FLOW STATEMENT
FOR THE YEARS ENDED ON 2021 AND 2020
Cash flows from operatins activities
Interest received
Interest paid
Fees and commissions received
Fees and commissions paid
Recoveries on loans previously written off
Contributions to the pension fund
Cash contributions to resolution funds and deposit guarantee schemes
Cash payments to employees and suppliers
Changes in operating assets and liabilities:
Deposits with / from Central Banks
Financial assets mandatorily at fair value through profit or loss
Financial assets designated at fair value through profit or loss
Financial assets at fair value through other comprehensive income
Financial assets at amortised cost
Securities
Loans and advances to banks
Loans and advances to customers
Financial liabilities at amortised cost
Deposits from banks
Due to customers
Derivatives - Hedge accounting
Other operating assets and liabilities
Net cash from operating activities before income tax
Corporate income taxes paid
Net cash from operating activities
Cash flows from investing activities
Sale of investments in subsidiaries and associated companies
Dividends received
Acquisition of tangible fixed assets
Sale of tangible fixed assets
Acquisition of intangible assets
Net cash from investing activities
Cash flows from financing activities
Contingent Capital Agreement
Emissão de obrigações e outros passivos titulados
Reimbursement of bonds and other debt securities
Net cash from financing activities
Net changes in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Net changes in cash and cash equivalents
Cash and cash equivalents at the end of the period
Cash and cash equivalents include:
Cash
Deposits with Central Banks
(of which, Restricted balances)
Deposits with banks
Total
(in thousands of Euros)
31.12.2021
31.12.2020
689 622
( 160 639)
287 013
( 40 296)
26 310
( 84 735)
( 40 172)
( 314 871)
741 134
( 239 631)
279 878
( 41 438)
29 596
( 266 833)
( 34 766)
( 358 667)
362 232
109 273
972 363
262 479
94 905
475 983
( 302 090)
( 26 501)
55 162
( 330 751)
1 624 592
405 818
1 218 774
( 2 438)
(1 161 671)
915 128
( 507 149)
191
804 356
500 648
( 511 297)
59 217
952 728
(2 837 350)
( 671 335)
(2 166 015)
( 3 017)
907 336
2 326 355
( 110 584)
( 33 557)
( 18 356)
2 292 798
( 128 940)
( 4)
18 400
( 116 630)
59 579
( 25 380)
-
16 928
( 43 398)
2 790
( 26 508)
( 64 035)
( 50 188)
429 013
575 000
( 84 916)
1 035 016
-
( 589)
919 097
1 034 427
3 147 860
855 299
2 261 646
3 147 860
1 406 347
855 299
5 409 506
2 261 646
20
20
20
144 220
5 264 629
( 264 955)
265 612
142 325
2 292 797
( 263 222)
89 746
5 409 506
2 261 646
7
The accompanying explanatory notes are an integral part of the separate financial statements.
The accompanying explanatory notes are an integral part of these separate financial statements
321
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2021
(Amounts expressed in thousands of Euro, except when otherwise indicated)
NOTE 1 – ACTIVITY
NOVO BANCO, S.A. is the main entity of the financial Group novobanco focused on the banking activity,
having been incorporated on the 3rd of August 2014 per deliberation of the Board of Directors of Bank
of Portugal (the Central Bank of Portugal) dated 3rd of August 2014 (8 p.m.), under No. 5 of article 145-
G of the General Law on Credit Institutions and Financial Companies (“Regime Geral das Instituições de
Crédito e Sociedades Financeiras” (RGICSF)) , approved by Decree-Law No. 298/92, of 31 December,
following the resolution measure applied by Bank of Portugal to Banco Espírito Santo, S.A. (BES), under
the terms of paragraphs 1 and 3-c) of article 145-C of the RGICSF, from which resulted the transfer of
certain assets, liabilities and off-balance sheet elements as well as assets under management of BES
from BES to novobanco (novobanco or the Bank).
As a result of the resolution measure applied, Fundo de Resolução (“Resolution Fund”) became the
sole owner of the share capital of novobanco, in the amount of Euro 4,900 million, with the status of
a transition bank, with a limited duration, due to the commitment assumed by the Portuguese State
with the European Commission to sell its shares within two years from the date of its incorporation,
extendable for one year.
The signing by the Resolution Fund of the contractual documents for the sale of the novobanco took
place on 31 March 2017. On 18 October 2017, the sale process of novobanco was concluded, following
the acquisition of a majority (75%) of its share capital by Nani Holdings, SGPS, S.A., a company that
belongs to the North American group Lone Star, through two capital increases of 750 million euros and
250 million euros, which took place in October and December, respectively.
With the conclusion of the sale process, novobanco ceased to be considered a transition Bank and
began to operate normally, although still being subject to certain measures restricting its activity,
imposed by the European Competition Authority.
Since 18 October 2017 the financial statements of novobanco are consolidated by Nani Holdings SGPS,
S.A., with registered office at Avenida D. João II, no. 46, 4A, Lisbon. LSF Nani Investments S.à.r.l.,
headquartered in Luxembourg, is the parent company of the Group.
NOVO BANCO, S.A. has its registered office in Lisbon, at Avenida da Liberdade, No. 195.
As at 31 December 2021, novobanco has a retail network comprising 292 branches in Portugal and
abroad (31 December 2020: 340 branches), branches in Spain and Luxembourg and 4 representative
offices in Switzerland (31 December 2020: 4 representative offices).
NOTE 2 – BASIS OF PRESENTATION
The separate financial statements of novobanco are presented as at 31 December 2021, expressed
in thousands of euros, rounded to the nearest thousand. The accounting policies used by the Bank in
the preparation are consistent with those used in the preparation of the financial statements as at 31
December 2020. The changes to the most relevant accounting policies are described in Note 5.
The separate financial statements of novobanco have been prepared under the assumption of
continuity of operations from the accounting records and following the historical cost convention,
except for the assets and liabilities accounted for at fair value, namely derivative financial instruments,
financial assets and liabilities at fair value through profit or loss, financial assets at fair value through
other comprehensive income, investment properties and hedged assets and liabilities, in respect of
their hedged component.
The separate financial statements and the Management Report of 31 December 2021 were approved
at the Executive Board of Directors’ meeting held on 3 March 2022 and will be submitted to the General
Assembly of Shareholders, which has the power to justifiably decide to change them. However, it is
Executive Board of Directors conviction that these separate financial statements will be approved
without changes.
1. References made to RGICSF refer to the version in force at the date of the resolution measure. The current version of the RGICSF has suffered
changes, namely in article 145, following the publication of Law 23-A 2015, of 26 March, that came into force on the day following its publication.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes NOTE 3 – STATEMENT OF COMPLIANCE
The separate financial statements of novobanco have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted in the European Union in force on January 1, 2021,
under Regulation (EC) nº 1606/2002 of the European Parliament and of the Council, of July 19, 2002,
and Notice nº 5/2015 of Bank of Portugal.
IFRS comprise accounting standards issued by the International Accounting Standards Board (IASB)
and interpretations issued by the International Financial Reporting Interpretation Committee (IFRIC)
and its predecessor body the Standing Interpretations Committee (SIC).
An analysis regarding recovery or settlement within 12 months after the reporting date (current) and
more than 12 months after the reporting date (noncurrent) is presented throughout the different
balance sheet notes.
NOTE 5 – CHANGES IN ACCOUNTING POLICIES
In the preparation of its financial statements with reference to 31 December 2021, the Bank did not
early adopt any new standard, interpretation or amendment issued, but not yet in force. The changes
to the standards adopted by the Bank are as follows:
NOTE 4 – PRESENTATION OF FINANCIAL
STATEMENTS
The Bank presents its statement of financial position in order of liquidity based on the Bank’s intention
and perceived ability to recover/settle the majority of assets/liabilities of the corresponding financial
statement line item.
Norms, interpretations, amendments, and revisions that came into force in the
fiscal year
The following norms, interpretations, amendments, and revisions adopted (“endorsed”) by the
European Union have mandatory application for the first time in the fiscal year beginning January 1,
2021:
Norm / Interpretation
Description
On May 28, 2020, the amendment to IFRS 16 entitled ‘Covid-19 Related Concessions’ was issued and introduced the following practical expedient: a lessee may elect not to assess whether a Covid-19 related concession of rent is a lease
modification.
Lessees that choose to apply this expedient, account for the change to rental payments resulting from a Covid-19 related concession in the same way as they account for a change that is not a lease modification under IFRS 16.
Amendments to IFRS 16 - Leases -
COVID-19 Related Concessions for Rentals
Beyond June 30, 2021
Initially, the practical expedient applied to payments originally due by June 30, 2021, however, due to the extended impact of the pandemic, on March 31, 2021, it was extended to payments originally due by June 30, 2022. The change
applies to annual reporting periods beginning on or after April 1, 2021.
In short, the practical expedient can be applied provided the following criteria are met:
•
the change in lease payments results in a revised consideration for the lease that is substantially equal to, or less than, the consideration immediately prior to the change;
• any reduction in lease payments only affects payments due on or before June 30, 2022; and
•
there are no significant changes to other terms and conditions of the lease.
Amendments to IFRS 4 - Insurance
Contracts
Deferral of IFRS 9
This amendment refers to the temporary accounting consequences that result from the difference between the effective date of IFRS 9 - Financial Instruments and the future IFRS 17 - Insurance Contracts. Specifically, the amendment
made to IFRS 4 postpones until January 1, 2023 the expiry date of the temporary exemption from the application of IFRS 9 in order to align the effective date of the latter with that of the new IFRS 17.
This temporary exemption is optional to apply and is only available to entities whose activities are predominantly insurance related.
Amendments to IFRS 9, IAS 39, IFRS 7,
IFRS 4 and IFRS 16 - Reform of benchmark
interest rates - phase 2
These amendments are part of the second phase of the IASB’s “IBOR reform” project and allow for exemptions related to reforming the benchmark for benchmark interest rates by an alternative interest rate (Risk Free Rate (RFR)). The
amendments include the following practical expedients:
• A practical expedient that requires contractual changes, or changes in cash flows that are directly required by the reform, to be treated the same as a floating interest rate change, equivalent to a movement in the market interest rate;
• Allow changes required by the reform to be made to hedge designations and hedge documentation without discontinuing the hedging relationship;
• Provide temporary operational relief to entities that must comply with the separately identifiable requirement when an RFR instrument is designated as a hedge of a risk component.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes These standards and changes had no material impact on the Bank’s financial statements.
of the change in the interest rate of reference on the estimated future cash flows.
NOTE 6 – MAIN ACCOUNTING POLICIES
6.1. Foreign currency transactions
6.1.1 Functional and presentational currency
The Bank’s separate financial statements are prepared in Euro, which is novobanco functional currency.
6.1.2 Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rate
prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into Euro at the foreign
exchange rates ruling at the balance sheet date. Foreign exchange differences arising on this translation
are recognized in the income statement.
Non-monetary assets and liabilities recorded at historical cost, denominated in foreign currency, are
translated using the exchange rate prevailing at the transaction date. Non-monetary assets and
liabilities, denominated in foreign currency, that are stated at fair value are translated into Euro at
the foreign exchange rates ruling at the dates the fair value was determined. The resulting exchange
differences are accounted for in the income statement, except if related to equity instruments classified
as financial assets at fair value through other comprehensive income, which are recorded in equity
reserves.
Foreign exchange differences relating to cash flow hedges and the hedging of the net investment in
foreign operational units, when they exist, are recognized in other comprehensive income.
6.2. Recognition of interest income and expense
Interest income and expense is recognized in the income statement under interest and similar income
and interest expense and similar charges for all financial instruments measured at amortised cost and
for all financial assets at fair value through other comprehensive income, using the effective interest
rate method. Interest arising on financial assets and liabilities at fair value through profit or loss is also
included under interest and similar income or interest expense and similar charges, as appropriate.
The effective interest rate is the rate that discounts the estimated future cash payments or receipts
throughout the expected life of the financial instrument or, when appropriate, a shorter period to the
net book value of the financial asset or liability. The effective interest rate is calculated at inception and
is not subsequently revised, except in respect of financial assets and liabilities with a variable interest
rate. In this case, the effective interest rate is periodically revised, taking into consideration the impact
When calculating the effective interest rate, the Bank estimates the cash flows considering all the
contractual terms of the financial instrument (for example, prepayment options) but does not consider
future credit losses. The calculation includes all the commissions that are an integral part of the effective
interest rate, transaction costs and all other related premiums or discounts.
Interest and similar income include interest from financial assets for which were recognized impairment.
The interest from financial assets classified as Stage 3 are determined based on the effective interest
rate method applied to the net book value. When the asset is no longer classified as Stage 3, the
interest is calculated based on the gross book value.
For derivative financial instruments, the interest component in the change in fair value of derivative
financial instruments classified as fair value hedge and fair value option is recognized under interest
income or interest expense. For other derivatives, the interest component inherent in the fair value
change will not be separated and will be classified under the income statement of assets and liabilities
held for trading (see Note 6.5).
6.3. Recognition of fee and commission income
Fees and commissions income are recognized as revenue from customer contracts to the extent that
performance obligations are met:
• Fees and commissions that are earned on the execution of a significant act, such as loan syndication
fees, are recognized as income when the significant act has been completed;
• Fees and commissions earned over the period during which the services are provided are recognized
as income in the financial year in which the services are provided;
• Fees and commissions that are an integral part of the effective interest rate of a financial instrument
are recognized as income using the effective interest rate method, as described in note 6.2.
6.4. Measurement categories for financial assets and liabilities
Dividend income is recognized when the right to receive the dividend payment is established.
6.5. Net trading income
Net income from financial assets and liabilities held for trading includes changes in fair value, interest
or expenses and dividends, as well as income from derivatives held for economic hedging that do not
qualify as hedging derivatives.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes 6.6. Net gain or loss on financial assets and liabilities designated at
fair value through profit or loss
Net gain or loss on financial assets and liabilities designated at fair value through profit or loss includes
the net gain or loss from financial assets and financial liabilities designated as at fair value through
profit or loss and also from non-trading assets measured at fair value through profit or loss, as required
by or elected under IFRS 9. The line item includes fair value changes, interest, dividends and foreign
exchange differences.
6.7. Net gain or loss on derecognition of financial assets measured
at amortized cost
Net loss on derecognition of financial assets measured at amortized cost includes loss (or income)
recognized on sale or derecognition of financial assets measured at amortized cost calculated as the
difference between the net book value (including impairment until the recoverable amount) and the
proceeds received.
6.8. Financial Instruments – Initial recognition
6.8.1. Date of recognition
Financial assets and liabilities, with the exception of loans and advances to customers and balances
due to customers, are initially recognized on the trade date, i.e., the date on which the Bank becomes
a party to the contractual provisions of the instrument. This includes regular way trades, i.e., purchases
or sales of financial assets that require delivery of assets within the time frame generally established by
regulation or convention in the marketplace. Loans and advances to customers are recognized when
funds are transferred to the customers’ accounts. The Bank recognizes balances due to customers
when funds are transferred to the Bank.
6.8.3. Day one profit
When the transaction price of the instrument differs from the fair value at origination and the fair
value is based on a valuation technique using only inputs observable in market transactions, the
Bank recognizes the difference between the transaction price and fair value in net trading income. In
those cases where fair value is based on models for which some of the inputs are not observable, the
difference between the transaction price and the fair value is deferred and is only recognized in profit or
loss when the inputs become observable, or when the instrument is derecognized.
The Bank recognizes in its income statement the gains arising from the intermediation fee (day one
profit), which is generated, primarily, through currency and derivative financial product intermediation,
given that the fair value of these instruments, both at inception and subsequently, is determined based
solely on observable market data and reflects the Bank’s access to the (wholesale market).
6.8.4. Measurement categories for financial assets and liabilities
The Bank classifies all of its financial assets based on the business model for managing the assets and
the asset’s contractual terms, measured at either:
• Amortized cost, as explained in Note 6.10.1;
• Fair Value of through Other Comprehensive Income, as explained in Notes 6.10.1, 6.10.2 and 6.10.3;
• Fair Value Through Profit or Losses, as set out in Note 6.10.4;
• Mandatorily measured at fair value through profit or loss, as set out in Note 6.10.4.
The Bank classifies and measures its derivative and trading portfolio at FVPL, as explained in Note
6.10.5. The Bank may designate financial instruments at FVPL, if so doing eliminates or significantly
reduces measurement or recognition inconsistencies, as explained in Note 6.10.6.
Financial liabilities, other than loan commitments and financial guarantees, are measured at amortized
cost or at FVPL when they are held for trading and derivative.
6.8.2. Initial measurement of financial instruments
The classification of financial instruments at initial recognition depends on their contractual terms
and the business model for managing the instruments, as described in 6.10 Financial instruments are
initially measured at their fair value (as defined in Note 6.9), except in the case of financial assets and
financial liabilities recorded at FVPL, transaction costs are added to, or subtracted from, this amount.
Trade receivables are measured at the transaction price. When the fair value of financial instruments
at initial recognition differs from the transaction price, the Bank accounts for the Day 1 profit or loss, as
described below.
6.9. Fair value of Financial Assets and Liabilities
The fair value of listed financial assets is determined based on the closing price (bid-price), the price
of the last transaction made or the value of the last known price (bid). In the absence of quotation,
the Bank estimates fair value using (i) valuation methodologies, such as the use of prices for recent
transactions, similar and carried out under market conditions, discounted cash flow techniques and
customized option valuation models. in order to reflect the particularities and circumstances of the
instrument and (ii) valuation assumptions based on market information.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes For the assets included in the level 3 of fair value hierarchy, whose quotation is provided by a third-
party using parameters not observable in the market, the Bank proceeds, when applicable, to a detailed
analysis of the historical and liquidity performance of these assets, which may imply an additional
adjustment to its fair value, as well as a result of additional internal or external valuations.
The following is a brief description of the type of assets and liabilities included in each level of the
hierarchy and the corresponding form of valuation:
Quoted market prices (level 1)
This category includes financial instruments with market prices quoted on official markets and those
with dealer price quotations provided by entities that usually disclose transaction prices for these
instruments traded on active markets.
The priority in terms of which price is used is given to those observed on official markets; where there
is more than one official market the choice falls on the main market on which those instruments are
traded.
The Bank considers market prices those disclosed by independent entities, assuming that these act
for their own economic benefit and that such prices are representative of the active market, using,
whenever possible, prices supplied by more than one entity (for a specific asset and/or liability). For
the process of re-evaluating financial instruments, the Bank analyses the various prices in order to
select the one it considers most representative for the instrument under analysis. Additionally, when
they exist, prices relating to recent transactions with similar financial instruments are used as inputs,
being subsequently compared to those supplied by said entities to better justify the option taken by
the Bank in favour of a specific price.
This category includes, amongst others, the following financial instruments:
I. Derivatives traded on an organized market;
II. Shares quoted on a stock exchange;
III. Open investment funds quoted on a stock exchange;
IV. Closed investment funds whose subjacent assets are solely financial instruments listed on a stock
exchange;
V. Bonds with observable market quotes;
VI. Financial instruments with market offers even if these are not available at the normal information
sources (e.g., securities traded based on recovery rate).
Valuation models based on observable market parameters / prices (level 2)
In this category, the financial instruments are valued using internal valuation techniques, namely
discounted cash flow models and option pricing models which imply the use of estimates and require
judgments that vary in accordance with the complexity of the financial instruments. Notwithstanding,
the Bank uses as inputs in its models, observable market data such as interest rate curves, credit
spreads, volatility and market indexes. This category also includes instruments with dealer price
quotations, but which markets have a lower liquidity. Additionally, the Bank also uses as observable
market variables, those that result from transactions with similar instruments and that are observed
with a certain regularity on the market.
This category includes, amongst others, the following financial instruments:
I. Bonds without observable market valuations valued using observable market inputs; and
II. Derivatives (OTC) over-the-counter valued using observable market inputs; and
III. Unlisted shares valued using internal models using observable market inputs.
Valuation models based on unobservable market parameters (level 3)
This level uses models relying on internal valuation techniques or quotations provided by third parties,
but which imply the use of non-observable market information. The bases and assumptions for the
calculation of fair value are in accordance with IFRS 13.
This category includes, amongst others, the following financial instruments:
I. Debt securities valued using non-observable market inputs;
II. Unquoted shares;
III. Closed real estate funds;
IV. Hedge funds;
V. Private equities;
VI. Restructuring funds; and
VII. Over the counter (OTC) derivatives with prices provided by third parties
6.10. Financial Assets and Liabilities
The Bank initially classifies all of its financial assets based on the business model for managing the
assets and the asset’s contractual terms. This classification determines how the asset is measured
after its initial recognition:
• Amortised cost: if it is held within a business model with the objective to hold financial assets in
order to collect contractual cash flows that are solely payments of principal and interest (SPPI -
solely payments of principal and interest);
• Fair value through other comprehensive income: if it is held within a business model, the objective
of which is achieved by both collecting contractual cash flows and selling financial assets and the
contractual cash flows fall under the scope of SPPI. In addition, upon initial recognition, the Bank
may choose to classify irrevocably equity instruments in the fair value through other comprehensive
income portfolio being the changes in the fair value recognized in equity;
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes • Mandatorily measured at fair value through profit or loss: all cases not within the scope of SPPI;
6.10.2 Debt instruments at FVOCI
• Measured at fair value through profit or loss: other financial instruments not included in the business
models described above. If these assets are acquired for the purpose of trading in the short term,
they are classified as held for trading.
The Bank classifies debt instruments at FVOCI when both of the following conditions are met:
• The financial asset is held within a business model, the objective of which is achieved by both
collecting contractual cash flows and selling financial assets;
6.10.1 Financial Assets at amortized cost or accounted at fair value through
other comprehensive income
• The contractual terms of the financial asset give rise to, on specific dates, cash flows that are solely
payments of principal and interests on the principal amount outstanding.
In accordance with IFRS 9 - Financial Instruments, for a financial asset to be classified and measured at
amortised cost or at fair value through other comprehensive income, it is necessary that:
i. The contractual terms of the financial asset give rise to cash flows that are solely payments of
principal and interest (SPPI - solely payments of principal and interest) on the principal amount
outstanding. Principal, for the purposes of this test is defined as the fair value of the financial
asset at initial recognition. The contractual terms that are SPPI are consistent with a basic lending
arrangement. Contractual terms that introduce exposure to risks or volatility in the contractual cash
flows that are unrelated to a basic lending arrangement, such as exposure to changes in stocks or
commodity prices, do not give rise to contractual cash flows that are solely payments of principal
and interest on the amount outstanding. In such cases, the financial asset is required to be measured
at fair value through profit or loss;
ii. The financial asset is held within a business model with the objective to hold financial assets to
maturity to collect contractual cash flows (financial assets at amortised cost) or to collect the
contractual cash flows until maturity and selling the financial asset (financial assets at fair value
through other comprehensive income). The assessment of the business models of the financial asset
is fundamental for its classification. The Bank determines the business models by financial asset
groups according to how they are managed to achieve a particular business objective. The Bank’s
business models determine whether cash flows will be generated by obtaining only contractual cash
flows, from selling the financial assets or both. At initial recognition of a financial asset, the Bank
determines whether it is part of an existing business model or if it reflects a new business model. The
Bank reassesses its business models in each reporting period in order to determine whether there
have been changes in business models since the last reporting period.
The above requirements do not apply to lease receivables, which meet the criteria defined in IFRS 16
– Leases.
Financial assets that are subsequently measured at amortised cost or at fair value through other
comprehensive income are subject to impairment.
At initial recognition, financial assets at amortised cost are recorded at acquisition cost, and
subsequently measured at amortised cost based on the effective interest rate. Interest, calculated at
the effective interest rate, and dividends are recognized in profit or loss.
Debt instruments classified as fair value through other comprehensive income are subsequently
measured at fair value with gains and losses arising due to changes in fair value being recognized
in Other Comprehensive Income, until the assets are derecognized, at which time the accumulated
amount of potential gains and losses recorded without reserves is transferred to results under the
heading of gains or losses on financial assets and liabilities accounted for at fair value through profit or
loss. Interest income and foreign exchange gains and losses are recognized in profit or loss in the same
manner as for financial assets measured at amortized cost as explained in Note 6.2.
The expected credit loss calculation for debt instruments at fair value through other comprehensive
income is explained in Note 6.16. Where the Bank holds more than one investment in the same security,
they are deemed to be disposed of on a first–in first–out basis.
6.10.3. Equity instruments at Fair Value through Other Comprehensive
Income
Upon initial recognition, the Bank occasionally elects to classify irrevocably some of its equity
investments as equity instruments at FVOCI when they meet the definition of definition of equity
under IAS 32 Financial Instruments: Presentation and are not held for trading. Such classification is
determined on an instrument-by-instrument basis.
Gains and losses on these equity instruments are never recycled to profit. Dividends are recognized in
profit or loss as other operating income when the right of the payment has been established, except
when the Bank benefits from such proceeds as a recovery of part of the cost of the instrument, in
which case, such gains are recorded in OCI.
Equity instruments at FVOCI are not subject to an impairment assessment.
6.10.4. Financial assets at fair value through profit or loss
Financial assets measured at fair value through profit or loss present the following characteristics:
• contractual cash flows are not SPPI (mandatorily measured at fair value through profit or loss); and/
or
•
it is held within a business model which objective is neither to obtain only contractual cash flows or
to obtain contractual cash flows and sale; or
•
it is designated at fair value through profit or loss as a result of applying the fair value option.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
These assets are measured at fair value and the respective revaluation gains or losses are recognized
in the income statement, with the exception of changes resulting from the change in the Group’s
own risk the Debt Valuation Adjustment (DVA), which are recognized in other comprehensive income.
novobanco does not records any gain arising from own credit risk.
6.10.5. Assets and liabilities held for trading
The Bank classifies financial assets or financial liabilities as held for trading when they have been
purchased or issued primarily for short-term profit-making through trading activities or form part of
a portfolio of financial instruments that are managed together, for which there is evidence of a recent
pattern of short-term profit taking.
Held-for-trading assets and liabilities are recorded and measured in the statement of financial position
at fair value. Changes in fair value are recognized in net trading income. Interest and dividend income or
expense is recorded in net trading income according to the terms of the contract, or when the right to
payment has been established.
Included in this classification are debt securities, equities, short positions and customer loans that have
been acquired principally for the purpose of selling or repurchasing in the near term.
6.10.6. Derivative financial instruments and hedge accounting
Classification
The Bank classifies its derivative portfolio into (i) fair value hedge and (ii) trading derivatives, which
include, in addition to the trading book, other derivatives contracted for the purpose of hedging certain
assets and liabilities designated at fair value through profit or loss but not classified as hedging (fair
value option).
Recognition and measurement
Derivative financial instruments are initially recognized at their fair value on the date the derivative
contract is entered into (trade date). Subsequent to initial recognition, the fair value of derivative financial
instruments is remeasured on a regular basis and the resulting gains or losses on remeasurement are
recognized directly in the income statement, except for derivatives designated as hedging instruments.
The recognition of the resulting gains or losses arising on the derivatives designated as hedging
instruments depends on the nature of the risk being hedged and the hedge model used.
Derivatives traded on organised markets, namely futures and some options contracts, are recorded as
trading derivatives and their fair value changes are recorded against the income statement. The margin
accounts are included under other assets and other liabilities (see Notes 28 and 32) and comprise the
minimum collateral mandatory for open positions.
The fair value of the remaining derivative financial instruments corresponds to their market value, if
available, or is determined using valuation techniques, including discounted cash flow models and
options pricing models, as appropriate.
Hedge accounting
• Classification criteria
Derivative financial instruments used for hedging purposes may be classified in the accounts as hedging
instruments provided the following criteria are cumulatively met:
i. Hedging instruments and hedged items are eligible for the hedge relationship;
ii. At the inception of the hedge, the hedge relationship is identified and documented, including
identification of the hedged item and hedging instrument and evaluation of the effectiveness of the
hedge;
iii. There is an economic relationship between the hedged item and the hedging instrument;
iv. The effect of credit risk does not dominate the changes in value that result from this economic
relationship;
v. The effectiveness of the hedge can be reliably measured, both at the inception of the hedge and on
an ongoing basis.
For the cases in which the Bank uses macro hedging, accounting is performed in accordance with IAS
39 (using the policy choice permitted under IFRS 9), with the Bank carrying out prospective tests on
the hedge relationship start date, when applicable, and retrospective tests in order to confirm, on each
balance sheet date, the effectiveness of hedging relationships, demonstrating that changes in the fair
value of the hedging instrument are covered by changes in the fair value of the hedged item in the
portion attributed to the hedged risk. Any ineffectiveness found is recognized in the income statement
when it occurs in gains or losses of hedge accounting.
The use of derivatives is framed in the Bank’s risk management strategy and objectives.
• Fair Value Hedge
In a fair value hedging operation, the carrying value of the hedged asset or liability, determined in
accordance with the respective accounting policy, is adjusted to reflect the changes in its fair value
attributable to the risk being hedged. Changes in the fair value of the derivatives that are designated as
hedging instruments are recorded in the income statement, together with any changes in the fair value
of the hedged asset or liability that are attributable to the risk hedged. In cases where the hedging
instrument covers an equity instrument designated at fair value through other comprehensive income,
changes in fair value are also recognized in other comprehensive income.
If the hedge no longer meets the effectiveness requirement, but the objective of risk management
stays the same, the Bank may adjust the hedging operation in order to meet the eligibility criteria
(rebalancing).
If the hedge no longer meets the criteria for hedge accounting (if the hedging instrument expires, is sold,
terminated or exercised, without having been replaced in accordance with the entity’s documented
risk management objective), the derivative financial instrument is transferred to the trading portfolio
and hedge accounting is discontinued prospectively. The cumulative adjustment to the carrying book
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes value of a hedged asset or liability corresponding to a fixed income instrument, is amortised via the
income statement over the period to its maturity, using the effective interest rate method.
subsequently, at amortised cost, using the effective interest rate method, except for short sales and
financial liabilities designated at fair value through profit or loss, which are measured at fair value.
• Cash Flow Hedge
When a derivative financial instrument is designated as a hedge against the variability of highly probable
future cash flows, the effective portion of the changes in the fair value of the hedging derivative is
recognized in reserves, being recycled to the income statement in the periods in which the hedged item
affects the income statement. The ineffective portion is recognized in the income statement.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for
hedge accounting, any cumulative gain or loss recognized in reserves at that time is recognized in the
income statement when the hedged transaction also affects the income statement. When a hedged
transaction is no longer expected to occur, the cumulative gain or loss reported in equity is recognized
immediately in the income statement and the hedging instrument is reclassified to the trading portfolio.
The Bank designates, at inception, certain financial liabilities at fair value through profit or loss when:
•
It eliminates or significantly reduces, a measurement or recognition inconsistency (accounting
mismatch) that would otherwise occur;
• The financial liability it’s part of a portfolio of financial assets or financial liabilities or both, managed
and evaluated on a fair value basis, according with the Bank’s risk management or investment
strategy; or
• These financial liabilities contain embedded derivatives and IFRS 9 allows designate the entire hybrid
contract at fair value through profit and loss.
Reclassifications between categories of liabilities are not allowed.
• Embedded derivatives
If a hybrid contract includes a host contract that is a financial asset under IFRS 9, the Bank classifies the
entire contract in accordance with the policy outlined in Note 6.9.
The structured products issued by the Bank – except for the structured products for which the embedded
derivatives were separated, recorded separately, and revalued at fair value - are classified under the fair
value through profit or loss category because they always meet one of the abovementioned conditions.
If a hybrid contract includes a host contract that is not an asset under IFRS 9, an embedded derivative
shall be separated from the host contract and accounted for as a derivative under this Standard if, and
only if:
The fair value of listed financial liabilities is their current market bid prices. In the absence of a quoted
price, the Bank establishes the fair value by using valuation techniques based on market information,
including the Bank issuer’s own credit risk.
a. The economic characteristics and risks of the embedded derivative are not closely related to the
economic characteristics and risks of the host contract;
a. A separate financial instrument with the same terms as the embedded derivative satisfies the
definition of a derivative; and
Profits or losses arising from the revaluation of liabilities at fair value are recorded in the income
statement. However, the change in fair value attributable to changes in credit risk is recognized in
other comprehensive income. At the time of derecognition of the liability, the amount recorded in other
comprehensive income attributable to changes in credit risk is not transferred to the income statement.
a. The hybrid contract is not measured at fair value and changes in fair value are recognized in profit
or loss (a derivative that is embedded in a financial liability at fair value through profit or loss is not
separated).
These embedded derivatives are measured at fair value with the changes in fair value being recognized
in the income statement.
6.10.7. Financial Liabilities
An instrument is classified as a financial liability when it contains a contractual obligation to transfer
cash or another financial asset, regardless of its legal form. Financial liabilities are derecognized when
the underlying obligation is liquidated, expires or is cancelled.
Non-derivatives financial liabilities include deposits from banks and customers, loans, debt securities,
subordinated debt and short sales.
These financial liabilities are recognized (i) initially, at fair value less transaction costs and (ii)
The Bank accounts material changes in the terms of an existing liability or part of it as an extinction of
the original financial liability and recognises of a new liability. The terms are assumed to be substantially
different if the present value of the cash flows under the new terms, including any fees paid net of
commissions received, and discounted using the original effective interest rate is at least 10% different
from the discounted present value of the remaining cash flows from the original financial liability. The
difference between the carrying amount of the original liability and the value of the new liability is
recognized in the income statement.
If the Bank repurchases debt securities issued, these are derecognized from the balance sheet and the
difference between the carrying book value of the liability and its acquisition cost is recognized in the
income statement.
6.10.8. Financial and performance guarantees
Financial guarantees
Financial guarantee contracts are contracts that require the issuer to make specified payments to
reimburse the holder for a loss due to non-compliance with the contractual terms of a debt instrument,
namely the payment of principal and/or interest.
329
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Financial guarantees are initially recognized in the financial statements at fair value. Financial guarantees
are subsequently measured at the higher of (i) the fair value recognized on initial recognition and (ii) the
amount of any financial obligation arising as a result of guarantee contracts, measured at the balance
sheet date. Any change in the amount of the liability relating to guarantees is taken to the income
statement.
Financial guarantee contracts issued by the Bank normally have a stated maturity date and a periodic
fee, usually paid in advance, which varies in function of the counterpart risk, the amount and the
time period of the contract. Consequently, the fair value of the financial guarantee contracts issued
by the Bank, at the inception date, is approximately equal to the initial fee received, considering that
the conditions agreed to are market conditions. Hence, the amount recognized at the contract date is
equal to the amount of the commission initially received, which is recognized in the income statement
over the period to which it relates. Subsequent fees are recognized in the income statement in the
period to which they relate.
Performance guarantees
Performance guarantees are contracts that result in the compensation of a party if the other does
not comply with its contractual obligation. Performance guarantees are initially recognized at their fair
value, which is normally evidenced by the amount of the commissions received during the contract
period. When there is a breach of contract, the Bank has the right to reverse the guarantee, recognizing
the amounts in Loans and advances to customers after transferring the compensation for the losses to
the collateral taker.
6.11. Reclassifications of financial assets and liabilities
If the Bank changes a business model, the financial assets included in that model are reclassified and
the classification and measurement requirements for the new category are applied prospectively as
from that date.
6.12. Modification of financial assets and liabilities
When the contractual cash flows of a financial asset are renegotiated or otherwise modified as a result
of commercial restructuring activity rather than due to credit risk and impairment considerations, the
Bank performs an assessment to determine whether the modifications result in the derecognition
of that financial asset. For financial assets, this assessment is based on qualitative factors. When
assessing whether or not to derecognize a loan to a customer, amongst others, the Bank considers the
following factors:
• Change in loan currency;
•
Introduction of an equity feature;
• Change in counterparty;
• Whether the modification is such that the instrument would no longer meet the SPPI criterion.
If the modification does not result in cash flows that are substantially different, as set out below, then it
does not result in derecognition. Based on the change in cash flows discounted at the original effective
interest rate, the Bank records a modification gain or loss, to the extent that an impairment loss has not
already been recorded. The Bank’s accounting policy in respect of forborne loans is set out in note 6.13.
When the modification of the terms of an existing financial liability is not judged to be substantial and,
consequently, does not result in derecognition, the amortized cost of the financial liability is recalculated
by computing the present value of estimated future contractual cash flows that are discounted at
the financial liability’s original EIR. Any resulting difference is recognized immediately in the result. For
financial liabilities, the Bank considers a modification to be substantial based on qualitative factors
and if it results in a difference between the adjusted discounted present value and the original carrying
amount of the financial liability.
6.13. Derecognition
Financial assets are derecognized from the balance sheet when (i) the Bank’s contractual rights
relating to the respective cash flows have expired, (ii) the Bank has substantially transferred all the
risks and benefits associated with its ownership, or (iii) despite the Bank having withholding part, but
not substantially all of the risks and benefits associated with its ownership, control over the assets has
been transferred. When an operation measured at fair value through other comprehensive income is
derecognized, the accumulated gain or loss previously recognized in other comprehensive income is
reclassified to results. In the specific case of equity instruments, the accumulated gain or loss previously
recognized in other equity is not reclassified to profit or loss, being transferred between equity items.
In the specific case of loans to customers, at the time of sale, the difference between the sale value
and the book value must be 100% provisioned, and at the time of the sale, the credit sold will be
derecognized against the funds / assets received. and consequent use of impairment on the balance
sheet.
6.14. Forborne modified loans
The Bank sometimes makes concessions or modifications to the original terms of loans as a response
to the borrower’s financial difficulties, rather than taking possession or to otherwise enforce collection
of collateral. The Bank considers a loan forborne when such concessions or modifications are provided
as a result of the borrower’s present or expected financial difficulties and the Bank would not have
agreed to them if the borrower had been financially healthy. Indicators of financial difficulties include
defaults on covenants, or significant concerns raised by the Global Risk Department. Forbearance
may involve extending the payment arrangements and/or the agreement of new loan conditions. If
modifications are substantial, the loan is derecognized, as explained in Note 6.12. Once the terms have
been renegotiated without this resulting in the derecognition of the loan, any impairment is measured
using the original effective interest rate as calculated before the modification of terms. The Bank
also reassesses whether there has been a significant increase in credit risk, as set out in Note 39 and
whether the assets should be classified as Stage 3.
330
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Derecognition decisions and classification between Stage 2 and Stage 3 are determined on a case-
by-case basis. If these procedures identify a loss in relation to a loan, it is disclosed and managed as an
impaired Stage 3 forborne asset. Once an asset has been classified as forborne, it will remain forborne
for a minimum 24-month probation period. In order for the loan to be reclassified out of the forborne
category, the customer has to meet all of the following criteria:
• All of its facilities have to be considered performing;
• The probation period of two years has passed from the date the forborne contract was considered
performing;
• Regular payments of more than an insignificant amount of principal or interest have been made
during at least half of the probation period;
• The customer does not have any contracts that are more than 30 days past due.
6.15. Offsetting of financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there
is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a
net basis, or to realize the asset and settle the liability simultaneously. The legally enforceable right
may not be contingent on future events and must be enforceable in the course of the normal activity of
novobanco, as well as in the event of default, bankruptcy or insolvency of the Bank or the counterparty.
6.16. Impairment of financial assets
Impairment principles
The Bank record impairment allowance for expected credit losses (“ECLs”) for the following debt
instruments:
• Loans and advances to customers;
• Financial and performance guarantees;
•
Import documentary credits;
• Confirmed export documentary credits;
• Undrawn loan commitments;
• Money market exposures;
• Securities portfolio.
Equity instruments are not subject to impairment under IFRS 9.
Debt instruments at amortised cost or at fair value through other comprehensive income are in the
scope of the impairment calculation.
Impairment losses identified are recognized in the income statement and are subsequently reversed
through the income statement if, in a subsequent period, the amount of impairment losses decreases.
Impairment is based on the credit losses expected to arise over the life of the asset (LTECL), unless
there has been no significant increase in credit risk since origination, in which case, the allowance is
based on the 12 months’ expected credit losses.
The 12mECL is the portion of LTECL that represent the ECL that result from default events on a financial
instrument that are possible within the 12 months after the reporting date. Both LTECL and 12mECL are
calculated on either an individual basis or a collective basis, depending on the nature of the underlying
portfolio of financial instruments.
The Bank has established a policy to perform an assessment, at the end of each reporting period,
of whether a financial instrument’s credit risk has increased significantly since initial recognition, by
considering the change in the risk of default occurring over the remaining life of the financial instrument.
Based on the above process, the Bank groups its loans into Stage 1, Stage 2, Stage 3 and POCI, as
described below:
• Stage 1: When loans are first recognized, the Bank recognizes an allowance based on 12mECL. Stage
1 loans also include facilities where the credit risk has improved, and the loan has been reclassified
from Stage 2.
• Stage 2: When a loan has shown a significant increase in credit risk since origination, the Bank
records an allowance for the LTECL. Stage 2 loans also include facilities, where the credit risk has
improved, and the loan has been reclassified from Stage 3.
• Stage 3: Loans considered credit impaired. The Bank records an allowance for the LTECL.
• POCI: Purchased or originated credit impaired (POCI) assets are financial assets that are credit
impaired on initial recognition. POCI assets are recorded at fair value at original recognition and
interest income is subsequently recognized based on a credit adjusted EIR. The ECL allowance is
only recognized or released to the extent that there is a subsequent change in the expected credit
losses.
The calculation of ECL
The Bank calculates ECL based on probability-weighted scenarios to measure the expected cash
shortfalls, discounted at an approximation to the EIR. A cash shortfall is the difference between the
cash flows that are due to an entity in accordance with the contract and the cash flows that the entity
expects to receive.
The mechanics of the ECL calculations are outlined below and the key elements are, as follows:
• PD Probability of Default - The Probability of Default is an estimate of the likelihood of default over
a given time horizon. A default may only happen at a certain time over the assessed period, if the
facility has not been previously derecognized and is still in the portfolio.
• EAD Exposure at Default - The Exposure at Default is an estimate of the exposure at a future default
date, taking into account expected changes in the exposure after the reporting date, including
repayments of principal and interest, whether scheduled by contract or otherwise, expected
drawdowns on committed facilities, and accrued interest from missed payments.
331
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes • LGD The Loss Given Default - The Loss Given Default is an estimate of the loss arising in the case
where a default occurs at a given time. It is based on the difference between the contractual cash
flows due and those that the lender would expect to receive, including from the realization of any
collateral or credit enhancements that are integral to the loan and not required to be recognized
separately.
Scenarios
As required by IFRS 9, the impairment assessment of the Bank reflects different expectations of
macroeconomic developments, i.e., it incorporates multiple scenarios. In order to incorporate the
effects of future macroeconomic behaviour on loss estimates, forward looking macroeconomic
estimates are included in some of the risk parameters used to calculate impairment. In fact, different
possible scenarios giving rise to the same number of impairment results are considered.
In this context, the process of defining macroeconomic scenarios considers the following principles:
• Representative scenarios that capture the existing non-linearities (e.g., a base scenario, a scenario
with a more favourable macroeconomic outlook and a scenario with a less favourable macroeconomic
outlook);
• The base scenario should be consistent with the inputs used in other exercises in the Bank (e.g.,
Planning). This is ensured since the option used for the purpose of calculating impairment was
precisely the same methodology that the Bank uses in internal and / or regulatory planning exercises;
• Alternative scenarios to the base scenario should not originate extreme scenarios;
• The correlation between the projected variables should be realistic with the economic reality (e.g. if
GDP is increasing it is expected that unemployment is decreasing).
The exercise of build the base and alternative macroeconomic scenarios for the Portuguese economy
is based on a combination of econometric forecasts, information on forecasts from other external
institutions and application of subjective expert judgment.
In the first component, GDP growth is estimated through estimates for the growth of expenditure
components, obtaining GDP through the formula GDP = Consumption + Investment + Exports - Imports.
The econometric specifications chosen are those that, after testing different alternatives, generate
the best result.
behavior (cost and contraction cycles), the reference of EBA recommendations for extreme adverse
scenarios, the stylized facts of economic cycles, with respect to the components of expenditure, prices,
unemployment, etc. and estimates.
Thus, when revising / updating the scenarios, the respective probabilities of execution are also reviewed.
Once the scenarios are updated, the values of the risk parameters are updated for later consideration in
the scope of the Impairment calculation. The final impairment calculated will thus result from the sum
of the impairment value of each scenario, weighted by the respective probability of execution.
Currently, 3 scenarios are considered for the calculation of impairment on a collective basis: base case,
downside case and an upside case.
The mechanics of the ECL method are summarized below:
• Stage 1: The 12mECL is calculated as the portion of LTECL that represent the ECL that result from
default events on a financial instrument that are possible within the 12 months after the reporting
date. The Bank calculates the 12mECL allowance based on the expectation of a default occurring
in the 12 months following the reporting date. These expected 12-month default probabilities are
applied to a forecast EAD and multiplied by the expected LGD and discounted by an approximation
to the original EIR. This calculation is made for each of the four scenarios, as explained above;
• Stage 2: When a loan has shown a significant increase in credit risk since origination, the Bank
records an allowance for the LTECL. The mechanics are similar to those explained above, including
the use of multiple scenarios, but PDs and LGDs are estimated over the lifetime of the instrument.
The expected cash shortfalls are discounted by an approximation to the original EIR;
• Stage 3: For loans considered credit-impaired, the Bank recognizes the lifetime expected credit
losses for these loans. The method is similar to that for Stage 2 assets, with the PD set at 100%.
• POCI assets are financial assets that are credit impaired on initial recognition. The Bank only
recognizes the cumulative changes in lifetime ECL since initial recognition, based on a probability-
weighting of the four scenarios, discounted by the credit-adjusted EIR;
•
letters of credit. When estimating LTECL for undrawn
Irrevocable commitments and
loan
commitments, the Bank estimates the expected portion of the loan commitment that will be drawn
down over its expected life. The ECL is then based on the present value of the expected shortfalls
in cash flows if the loan is drawn down, based on a probability-weighting of the four scenarios. The
expected cash shortfalls are discounted at an approximation to the expected EIR on the loan;
The econometric estimates thus obtained are then weighted with forecasts from external institutions,
according to the principle that the combination of different projections tends to be more accurate than
just a forecast (the risk of errors and bias associated with specific methods and variables is minimized).
• For credit cards and revolving facilities that include both a loan and an undrawn commitment, ECL
is calculated and presented together with the loan. For loan commitments and letters of credit, the
ECL is recognized within Provisions.
The forecasts for prices (consume and real estate) and unemployment follow a similar methodology:
own forecasts based on an estimated model, weighted with forecasts from external institutions,
if available. In a base scenario, the projections for interest rates start from market expectations
(provided by Bloomberg), with possible adjustments in accordance with the principles defined above,
if considered appropriate (weighting by expert judgment and forecasts from external institutions).
The alternative scenarios are based on the historical observation of deviations from the trend in GDP
The ECL for debt instruments measured at FVOCI do not reduce the carrying amount of these financial
assets in the statement of financial position, which remains at fair value. Instead, an amount equal to
the allowance that would arise if the assets were measured at amortized cost is recognized in OCI as an
accumulated impairment amount, with a corresponding charge to profit or loss. The accumulated loss
recognized in OCI is recycled to the profit and loss upon derecognition of the assets.
332
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes For POCI financial assets, the Bank only recognizes the cumulative changes in LTECL since initial
recognition in the loss allowance.
The ongoing assessment of whether a significant increase in credit risk has occurred for revolving
facilities is similar to other lending products. This is based on shifts in the customer’s internal credit
grade, but greater emphasis is also given to qualitative factors such as changes in usage. The interest
rate used to discount the ECL for credit cards is based on the average effective interest rate that is
expected to be charged over the expected period of exposure to the facilities. This estimation takes into
account that many facilities are repaid in full each month and are consequently not charged interest.
The calculation of ECL, including the estimation of the expected period of exposure and discount rate
is made, on an individual basis for corporate and on a collective basis for retail products. The collective
assessments are made separately for portfolios of facilities with similar credit risk characteristics.
Individual impairment analysis process
The Individual Credit Analysis comprises a staging analysis and an individual impairment quantification
analysis. The staging analysis is performed for debtors previously classified as stage 1 and stage 2, with
the purpose of evaluating the adequacy of the assigned stage with additional information obtained
on an individual basis. The individual impairment quantification analysis aims to determine the most
appropriate impairment rate for each credit customer, regardless of the amount resulting from the
Collective Impairment Model. Clients that have been subject to Individual Analysis, but for which an
objective impairment loss was not considered, are again included in the Collective Impairment Model.
The Individual Analysis of the selected clients is carried out based on the information provided by the
Commercial Structures regarding the client / Bank’s framework, historical and forecast cash flows
(when available) and existing collateral.
6.17. Collateral and Financial Guarantees Valuation
To mitigate its credit risks on financial assets, the Bank seeks to use collateral, where possible. The
collateral comes in various forms, such as cash, securities, letters of credit/guarantees, real estate,
receivables, inventories, other non-financial assets and credit enhancements such as netting
agreements. Collateral, unless repossessed, is not recorded on the Bank’s statement of financial
position. Collateral is generally assessed, at a minimum, at inception and re-assessed on a quarterly
basis. However, some collateral, for example, cash or securities relating to margining requirements, is
valued daily. To the extent possible, the Bank uses active market data for valuing financial assets held
as collateral. Other financial assets which do not have readily determinable market values are valued
using models. Non-financial collateral, such as real estate, is valued based on data provided by third
parties such as mortgage brokers or based on housing price indices.
6.18. Foreclosed properties and non-current assets held for sale
In the scope of its loan granting activity, the Bank incurs in the risk of the borrower failing to repay all
the amounts due. In case of loans and advances with mortgage collateral, the Bank executes these and
receives real estate properties resulting from foreclosure. Due to the provisions of the General Law on
Credit Institutions and Financial Companies (“Regime Geral das Instituições de Crédito e Sociedades
Financeiras” (RGICSF)), banks are prevented, unless authorised by Bank of Portugal, from acquiring real
estate property that is not essential to their installation and daily operations and the pursuit of their
object (No. 1 of article 112 of RGICSF), being able to acquire, however, real estate property in exchange
for loans granted by same. This real estate property must be sold within 2 years, period which may,
based on reasonable grounds, be extended by Bank of Portugal, on the conditions to be determined by
this Authority (article 114 of RGICSF).
Although the Bank’s objective is to immediately dispose of all real estate property acquired as payment
in kind for loans or through foreclosure, during financial year 2016 the Bank changed the classification of
this real estate properties from Non-current assets held for sale to Other assets due to the permanence
of same in the portfolio exceeding 12 months. However, the accounting method has not changed, these
being initially recognized at the lower of their fair value less costs to sell and the carrying amount of
the subjacent loans. Subsequently, these real estate properties are measured at the lower of its initial
carrying amount and the corresponding fair value less costs to sell and it is not depreciated. For real
estate properties recorded in the balance sheet of novobanco, the immediate sale value is considered
to be the respective fair value. The market value of property for which a promissory contract of sale and
purchase has been signed corresponds to the value of that contract.
The valuation of the real estate properties received for credit recovery is performed in accordance with
one of the following methodologies, applied in accordance with the specific situation of the asset:
I. Market Method
The Market Comparison Criteria takes as a reference transaction values of similar and comparable real
estate properties to the real estate property under valuation, obtained through market prospection
carried out in the zone.
II. Income Method
Under this method, the real estate property is valued based on the capitalization of its net income,
discounted to the present using the discounted cash-flow method.
III. Cost Method
This method aims to reflect the current amount that would be required to substitute the asset in its
present condition, separating the value of the real estate property into its fundamental components:
Urban Ground Value and Urbanity Value; Construction Value; and Indirect Costs Value.
Valuations carried out are performed by independent entities specialized in these services. The valuation
reports are analysed internally, namely comparing the sales values with the revalued amounts of the
assets so as to assess the parameters and process adequacy with the market evolution.
Additionally, since these are assets whose fair value level in the hierarchy of IFRS 13 mostly corresponds
to level 3, given the subjectivity of some assumptions used in the valuations and the fact that there are
external indications with alternative values, the Bank proceeds to analysis on the assumptions used,
which may imply additional adjustments to their fair value, supported by additional internal or external
valuations.
333
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes For assets of greater relevance, the challenge of the appraisals that serve as a basis for the valuation
of the real estate assets is carried out by a specialized area of the Bank that is independent of this
valuation process, in accordance with an annual work plan previously approved by the Executive Board
of Directors.
Non-current assets or disposal groups (groups of assets to be disposed of together and the related
liabilities that include at least one non-current asset) are classified as held for sale when their carrying
values will be recovered mainly through a sale transaction (including those acquired exclusively with a
view to their subsequent disposal), the assets or disposal groups are available for immediate sale and
the sale is highly probable (within the period of one year).
Immediately before the initial classification as held for sale, the measurement of the non-current
assets (or of all the assets and liabilities in a disposal group) is brought up to date in accordance with
the applicable IFRS. Subsequently, these assets or disposal groups are remeasured at the lower of
their carrying value and fair value less costs to sell. Where the carrying value of non-current assets
corresponds to fair value less costs to sell, the fair value level of the IFRS 13 hierarchy corresponds
mostly to Level 3.
6.19. Write-offs
Write-off is defined as the derecognition of a financial asset from the Bank’s balance sheet, which
should only occur when cumulatively:
I. The total amount of the credit has been demanded, that is, the credit must be fully recognized
(totally or partially) as overdue credit. Exemptions from this requirement are (i) debt restructuring/
pardon carried out within the scope of extra-judicial, PER and Insolvency agreements, in which part
of the credit may remain performing and the remainder of the debt will be written off by judicial/
extra-judicial decision and (ii) situations in which that despite the contract not having expired in its
entirety, the Group understands that it is facing a scenario of total or partial loss;
II. All the recovery efforts, considered appropriate, have been developed (and the relevant evidence
gathered);
III. The credit recovery expectations are very low, being necessary that the amount to be written
off (whether total or partial write-off of the debt) to be fully covered by impairment and under
management by the central credit recovery application. It is necessary to ensure that the amount
to be written off from the asset is 100% impaired (constituted at least in the month prior to the
write-off); and
IV. A final agreement has been obtained as part of a restructuring process and the remaining debt can
no longer be recovered.
6.20. Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise balances with a
maturity of less than three month from the date of acquisition / contracting and whose risk of change
in value is immaterial, including cash, deposits with Central Banks and deposits with other credit
institutions. Cash and cash equivalents exclude restricted balances with Central Banks.
6.21. Assets sold with repurchase agreements, securities loaned
and short sales
Securities sold subject to repurchase agreements (repos) at a fixed price or at a price that corresponds
to the sales price plus a lender’s return are not derecognized from the balance sheet. The corresponding
liability is included under amounts due to banks or to customers, as appropriate. The difference between
the sale and repurchase price is treated as interest and deferred over the life of the agreement, using
the effective interest rate method.
Securities purchased under agreements to resell (reverse repos) at a fixed price or at a price that
corresponds to the purchase price plus a lender’s return are not recognized in the balance sheet, the
purchase price paid being recorded as loans and advances to banks or customers, as appropriate. The
difference between the purchase and resale price is treated as interest and deferred over the life of the
agreement, using the effective interest rate method.
Securities ceded under loan agreements are not derecognized in the balance sheet, being classified and
measured in accordance with the accounting policy described in Note 6.10. Securities received under
borrowing agreements are not recognized in the balance sheet.
Short sales correspond to securities sold that are not included in the Bank’s assets. They are recorded
as financial liabilities held for trade, at the fair value of the assets to be returned in the scope of the
repurchase agreement. Gains and losses resulting from the change in their respective fair value are
recognized directly in the income statement in Gains or Losses from financial assets and liabilities held
for trading.
6.22. Property, plant and equipment
The Bank’s tangible fixed assets are measured at cost less accumulated depreciation and impairment
losses. The cost includes expenditure that is directly attributable to the acquisition of the assets.
Subsequent costs with tangible fixed assets are only recognized when it is probable that future
economic benefits associated with them will flow to the Bank. All repair and maintenance costs are
charged to the income statement during the period in which they are incurred, on the accrual basis.
Subsequent payments received after the write-off must be recognized as subsequent write-off
recoveries at other operating income.
Land is not depreciated. The depreciation of tangible fixed assets is calculated using the straight-line
method, at the following depreciation rates that reflect their estimated useful lives:
334
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Self-Service Buildings
Leasehold improvements
IT equipment
Furniture and fixtures
Interior installations
Security equipment
Machines and tools
Transport equipment
Other equipment
Number of Years
35 to 50
10
4 to 8
4 to 10
5 to 10
4 to 10
4 to 10
4
5
The useful lives and residual values of the tangible fixed assets are reviewed at each reporting date.
When there is an indication that an asset may be impaired, IAS 36 requires its recoverable amount to be
estimated and an impairment loss recognized when the book value of the asset exceeds its recoverable
amount. Impairment losses are recognized in the income statement, being reversed in subsequent
periods, when the reasons that led to their initial recognition cease to exist. For this purpose, the new
depreciated amount shall not exceed that which would be recorded had the impairment losses not
been imputed to the asset but considering the normal depreciation the asset would have been subject
to.
The recoverable amount is determined as the lower of its net selling price and its value in use, which is
based on the net present value of the estimated future cash flows arising from the continued use and
ultimate disposal of the asset at the end of its useful life.
On the date of the derecognition of a tangible fixed asset, the gain or loss determined as the difference
between the net selling price and the net carrying book value is recognized under the caption Other
operating income or Other operating expenses.
6.23. Leases
Lease Definition
The Bank assesses at contract inception whether a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.
As lessee
As a lessee, the Bank leases various assets, including real estate, vehicles and IT equipment. The Bank
recognizes lease liabilities to make lease payments and right-of-use assets representing the right to
use the underlying assets.
As previously mentioned, the Bank has opted not to recognize assets under right of use and liabilities for
short-term leases, with a lease term of 12 months or less, and low value asset leases (e.g. IT equipment)
with a new value of less than Euro 5 thousand. The Bank recognizes the lease payments associated
with these leases as expenses on a straight-line basis over the lease term in income statement as
“Other administrative expenses – rents and rentals”.
The Bank presents assets under right of use that do not fit the definition of investment property as
“tangible fixed assets”, in the same line as the underlying assets of the same nature that they own.
Right-of-use assets that fall under the definition of investment property are presented as investment
property. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes
the amount of lease liabilities recognized, initial direct costs incurred and less any lease incentives
received.
The Bank presents the lease liabilities under “Other liabilities” in the statement of financial position.
The lease liability corresponds to the present value of the future cash flows to be paid during the lease
contract. The lease rents include fixed amounts, variable amounts that depend on an interest rate,
amounts to be payable relating to guarantees on the residual value of the asset. Any options are also
included if they are reasonably expected to be exercised.
Variable amounts that do not depend on interest rate are recognized as cost in the period to which they
relate. During the lease period, the lease liability increases by the interest accrual and decreases by the
lease rents payment. The value of the lease liability changes if the terms of the lease (such as the term
or the value of the index) change or if the valuation of the exercise of the option to acquire the asset
changes.
As Lessor
Financial leases
Transactions in which the risks and benefits inherent in the ownership of an asset are substantially
transferred to the lessee are classified as finance leases. Financial leasing contracts are recorded in the
balance sheet as credits granted for an amount equivalent to the net investment made in the leased
assets, together with any estimated non-guaranteed residual value. Interest included in rents charged
to customers is recorded as income while capital amortizations, also included in rents, are deducted
from the amount of credit granted to customers. The recognition of interest reflects a constant periodic
rate of return on the lessor’s remaining net investment.
Operating leases
All lease transactions that do not fall under the definition of finance lease are classified as operating
leases. Revenues relating to these contracts are recognized on a straight-line basis over the lease term
and recorded in “Other operating income”.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes 6.24. Intangible assets
The costs incurred with the acquisition, production and development of software are capitalised, as
are additional costs incurred by the Bank to implement said software. These costs are amortised on a
straight-line basis over their expected useful lives, which usually range between 3 and 6 years.
Costs that are directly associated with the development of specific software applications, that will
probably generate economic benefits beyond one financial year, are recognized and recorded as
intangible assets.
All remaining costs associated with information technology services are recognized as an expense as
incurred.
6.25. Impairment of non-financial assets
The Bank assesses, at each reporting date, whether there is an indication that an asset may be
impaired. If any indication exists, or when annual impairment testing for an asset is required, the Bank
estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asse or
cash generating unit fair value less costs of disposal and its value in use. The recoverable amount is
determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. When the carrying amount of an asset or
cash generating unit exceeds its recoverable amount, the asset is considered impaired and is written
down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset. In determining fair value less costs of disposal, recent market transactions
are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
These calculations are corroborated by valuation multiples, quoted share prices for publicly traded
companies or other available fair value indicators.
The Bank bases its impairment calculation on most recent budgets and forecast calculations, which
are prepared separately for each of the Bank’s cash generating units to which the individual assets are
allocated. These budgets and forecast calculations generally cover a period of five years. A long-term
growth rate is calculated and applied to project future cash flows after the fifth year (perpetuity).
Impairment losses of continuing operations are recognized in the statement of profit or loss in expense
categories consistent with the function of the impaired asset, except for properties previously
revalued with the revaluation taken to OCI. For such properties, the impairment is recognized in other
comprehensive income up to the amount of any previous revaluation.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether
there is an indication that previously recognized impairment losses no longer exist or have decreased.
If such indication exists, the Bank estimates the assets or cash generating unit recoverable amount. A
previously recognized impairment loss is reversed only if there has been a change in the assumptions
used to determine the asset’s recoverable amount since the last impairment loss was recognized. The
reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor
exceed the carrying amount that would have been determined, net of depreciation, had no impairment
loss been recognized for the asset in prior years. Such reversal is recognized in the statement of profit
or loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a
revaluation increase.
Intangible assets with indefinite useful lives are tested for impairment annually at the cash generating
unit level, as appropriate, and when circumstances indicate that the carrying value may be impaired.
The Bank assesses where climate risks may have a significant impact, such as the introduction
of emissions reduction legislation that may increase production costs. These risks in relation to
climate-related issues are included as key assumptions when they materially affect the impairment
measurement. These assumptions have been included in the cash flow forecasts in the value in use
assessment.
6.26. Employee benefits
Pensions
Pursuant to the signature of the Collective Labour Agreement (“Acordo Coletivo de Trabalho” (ACT))
for the banking sector and its subsequent amendments resulting from the 3 tripartite agreements
described in Note 16, pension funds and other mechanisms were set up to cover liabilities assumed
with pensions on retirement, disability, survival and health-care benefits.
The liabilities’ coverage is assured, for most of the Group companies, by pension funds managed by
GNB - Sociedade Gestora de Fundos de Pensões, SA, subsidiary of the Group.
The pension plans of the Bank are defined benefit plans, as they establish the criteria to determine
the pension benefit to be received by employees during retirement, usually dependent on one or more
factors such as age, years of service and salary level.
The retirement pension liabilities are calculated semi-annually, in 31 December and 30 June of each
year, for each plan individually, using the Projected Unit Credit Method, being annually reviewed by
qualified independent actuaries. The discount rate used in this calculation is determined with reference
to market rates associated with high-quality corporate bonds, denominated in the currency in which
the benefits will be paid out and with a maturity similar to the expiry date of the plan’s liabilities.
The Bank determines the net interest income / expense for the period incurred with the pension plan
by multiplying the plan’s net assets / liabilities (liabilities net of the fair value of the fund’s assets) by
the discount rate used to measure the retirement pension liabilities referred to above. On that basis,
the net interest income / expense was determined based on the interest cost on the retirement
pension liabilities net of the expected return on the funds’ assets, both calculated using the discount
rate applied in the determination of the retirement pension liabilities.
Re-measurement gains and losses, namely (i) actuarial gains and losses arising due to differences
between actuarial assumptions used and real values verified (experience adjustments) and changes
in actuarial assumptions and (ii) gains and losses arising due to the difference between the expected
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes return on the fund’s assets and the actual investment returns, are recognized in equity under the
caption other comprehensive income.
The Bank recognizes as a cost in the income statement a net total amount that includes (i) current
service costs, (ii) net interest income / expense with the pension fund, (iii) the effect of early retirement,
(iv) past service costs, and (v) the effect of settlements or curtailments occurring during the period.
The net interest income / expense with the pension plan is recognized as interest income or interest
expense, depending on its nature. Early retirement costs correspond to increases in liabilities due to
employees retiring before turning 65 (normal retirement age foreseen in the ACTV) and which forms
the basis of the actuarial calculation of pension fund liabilities. Whenever the possibility of the early
retirement provided for in the pension fund regulation is invoked, the responsibilities of same must
be incremented by the value of the actuarial calculation of the liabilities corresponding to the period
between the early retirement and the employee turning 65.
The Bank makes payments to the funds to assure their solvency, the minimum levels set by Bank of
Portugal being: (i) the liability with pensioners must be totally funded at the end of each period, and (ii)
the liability relating to past service costs for active employees must be funded at a minimum level of
95%.
The Bank assesses the recoverability of any excess in a fund regarding he retirement pension liabilities,
based on the expectation of reductions in future contributions.
Health-care benefits
The Bank provides to its banking employees health-care benefits through a specific Social-Medical
Assistance Service. This Social-Medical Assistance Service (SAMS) is an autonomous entity which is
managed by the respective Union.
SAMS provides its beneficiaries with services and/or contributions on medical assistance expenses,
auxiliary diagnostic means, medication, hospital admissions and surgical interventions, in accordance
with its financial resources and internal regulations.
Arising from the signature of the new Collective Labour Agreement (ACT) on 5 July 2016, published
in Labour Bulletin (Boletim do Trabalho) No. 29, of 8 August 2016, the Bank’s contributions to SAMS,
correspond to a monthly fixed amount (as per Annex VI of the new ACT) for each employee, 14 times a
year, recorded on a monthly basis in personnel costs, while the component to be paid by the employee
is discounted monthly in the processing of salary, against the caption Amounts payable (SAMS).
The calculation and recognition of the Bank’s liability with post-retirement health-care benefits is
similar to the calculation and recognition of the pension liability described above. These benefits
are covered by the Pension Fund, which presently covers all liabilities with pensions and health-care
benefits (defined benefit plan).
Career bonus
The ACT provides for the payment by the Bank of a career bonus, due at the time immediately prior to
the employee’s retirement if he retires at the Bank’s service, corresponding to 1.5 of his salary at the
time of payment.
These long-term service bonuses were accounted for by the Bank in accordance with IAS 19, as
other long-term employee benefits. The Bank’s liability with these long-term service bonuses were
periodically estimated by the Bank using the Projected Unit Credit Method. The actuarial assumptions
used were based on expectations as to future salary increases and mortality tables. The discount rate
used in this calculation was determined using the methodology described for retirement pensions. In
each period, the increase in the liability for long-term service bonuses, including actuarial gains and
losses and past service costs, was charged to the income statement, in Personnel Expenses.
Employees’ variable remuneration and other obligations
The Bank recognises under costs the short-term benefits paid to employees who were at its services
in the respective accounting period.
• Profit-sharing and bonus plans
The Bank recognizes the cost expected with profit-sharing pay-outs and bonuses when it has a
present, legal or constructive, obligation to make such payments as a result of past events, and can
make a reliable estimate of the obligation.
• Obligations with holidays, holiday subsidy and Christmas subsidy
In accordance with the legislation in force in Portugal, employees are annually entitled to one month
of holidays and one month of holiday subsidy, this being a right acquired in the year prior to their
payment. In addition, employees are annually entitled to one month of Christmas subsidy, which
right is acquired throughout the year and settled during the month of December of each calendar
year. Hence, these liabilities are recorded in the period in which the employees acquire the right to
same, regardless of the date of their respective payment.
6.27. Provisions and Contingent Liabilities
Provisions are recognized when: (i) the Bank has a current legal or constructive obligation, (ii) it is
probable that its settlement will be required in the future and (iii) a reliable estimate of the obligation
can be made.
Provisions related to legal cases opposing the Bank to third parties, are constituted according to internal
risk assessments made by Management, with the support and advice of its legal advisors, both internal
and external.
When the effect the discounting is material, the provision corresponds to the net present value of the
expected future payments, discounted at an appropriate rate considering the risk associated with the
obligation. In these cases, the increase in the provision due to the passage of time is recognized in
financial expenses.
Restructuring provisions are recognized when the Bank has approved a formal, detailed restructuring
plan and such restructuring has either commenced or has been publicly announced.
A provision for onerous contracts is recognized when the benefits expected to be derived by the Bank
from a contract are lower than the unavoidable costs of meeting its obligation under the contract.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes This provision is measured at the present value of the lower of the estimated cost of terminating the
contract and the estimated net costs of continuing the contract.
If a future outflow of funds is not probable, this situation reflects a contingent liability. Contingent
liabilities are always disclosed, except when the likelihood of their occurrence is remote.
6.28. Income Taxes
novobanco and its subsidiaries are subject to the tax regime consigned in the Código do Imposto sobre
o Rendimento das Pessoas Coletivas (IRC Code).
Corporate income tax comprises current tax and deferred tax.
Corporate income tax is recognized in the income statement except to the extent that it relates to
items recognized directly in equity, in which case it is recognized under equity. Corporate income tax
recognized directly in equity relating to fair value remeasurement of financial assets at fair value
through other comprehensive income and cash flow hedges is subsequently recognized in the income
statement when the gains or losses giving rise to said income tax are also recognized in the income
statement.
Current tax
Current tax is the tax expected to be paid on the taxable profit for the year, calculated using tax rules
and tax rates enacted or substantively enacted in each jurisdiction and any adjustments to prior period
taxes. The tax is recognized in each financial reporting period based on management estimates as
regards the average effective tax rate foreseen for the entire fiscal year.
Current tax is calculated based on taxable income for the period, which differs from the accounting
result due to adjustments resulting from expenses or income not relevant for tax purposes or which will
only be considered in subsequent years.
Deferred tax
Deferred tax is calculated on timing differences arising between the carrying book values of assets
and liabilities for financial reporting purposes and their respective tax base and is calculated using the
tax rates enacted or substantively enacted at the balance sheet date in each jurisdiction and that are
expected to apply when the timing differences are reversed.
Deferred tax liabilities are recognized for all taxable timing differences except for i) differences arising
on the initial recognition of assets and liabilities that neither affect the accounting nor taxable profit; ii)
that do not result from a business combination, and iii) differences relating to investments in subsidiaries
to the extent that they will probably not reverse in the foreseeable future. Deferred tax assets are
recognized to the extent that it is probable that future taxable profits will be available against which
the deductible timing differences can be offset for tax purposes (including tax losses carried forward).
Deferred tax liabilities are always accounted for, regardless of the performance of Bank.
The taxable profit or tax loss determined by the Bank can be adjusted by the Portuguese Tax Authorities
within a period of four years, except in the case of any deduction or use of tax credit, in which the expiry
period is the exercise of that right (5 or 12 years in the case of tax losses, depending on the year). The
Executive Board of Directors considers that any corrections, resulting mainly from differences in the
interpretation of tax legislation, will not have a materially relevant effect on the financial statements.
The Bank, as established in IAS 12, paragraph 74, offsets deferred tax assets and liabilities whenever
(i) it has the legally enforceable right to offset current tax assets and current tax liabilities; and (ii)
they relate to corporate income taxes levied by the same Taxation Authority, on the same tax entity
or different taxable entities that intent to settle current tax liabilities and assets on a net basis, or to
realize the assets and settle the liabilities simultaneously, in each future period in which the deferred
tax liabilities or assets are expected to be settled or recovered.
The Bank complies with the guidelines of IFRIC 23 - Uncertainty on the Treatment of Income Tax with
regard to the determination of taxable profit, tax bases, tax losses to be reported, tax credits to be
used and tax rates in scenarios of uncertainty regarding the treatment of income tax, with no material
impact on its financial statements resulting from its application.
6.29. Treasury shares
Own equity instruments of the Bank which are acquired by it are deducted from equity. Consideration
paid or received on the purchase, sale, issue or cancellation of the Bank’s own equity instruments is
recognized directly in equity. No gain or loss is recognized on the result of the purchase, sale, issue
or cancellation of own equity instruments. At 31 December 2021, the Bank does not hold own equity
instruments.
6.30. Disintermediation
The Bank provides trust and other fiduciary services that result in the holding or investing of assets
on behalf of its clients. Assets held in a fiduciary capacity, unless recognition criteria are met, are not
reported in the financial statements, as they are not assets of the Bank.
6.31. Dividends
Dividends on ordinary shares are recognized as a liability and deducted from equity when they are
approved by the Bank’s shareholders. Interim dividends are deducted from equity when they are
declared and are no longer at the discretion of the Bank.. Dividends for the year that are approved after
the reporting date are disclosed as an event after the reporting date.
6.32. Reserves
The reserves recorded in equity on the Bank’s statement of financial position include:
• Other Comprehensive Income:
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes – Fair value reserves which comprise: (i) The cumulative net change in the fair value of debt
instruments classified at fair value through other comprehensive income, minus the allowance
for expected credit loss, when applicable; (ii) The cumulative net change in fair value of equity
instruments at fair value through other comprehensive income;
– Impairment reserves of debt instruments classified at fair value through other comprehensive
income;
– Reserves associated with sales of equity instruments classified as fair value through other
comprehensive income, which include the proceeds from sales of these securities;
– Actuarial deviation reserves that correspond to actuarial gains and losses, resulting from
differences between the actuarial assumptions used and the values actually verified (experience
gains and losses) and from changes in actuarial assumptions and the gains and losses arising from
the difference between the income expected from the fund’s assets and the values obtained;
– Own credit revaluation reserve, which comprises the cumulative changes in the fair value of the
financial liabilities designated at fair value through profit or loss attributable to changes in the
Bank’s own credit risk;
– Cash flow hedge reserve, which comprises the portion of the gain or loss on a hedging instrument
in a cash flow hedge that is determined to be an effective hedge;
– Foreign currency translation reserve, which is used to record exchange differences arising from
the translation of the net investment in foreign operations, net of the effects of hedging;
– Other capital reserve, which includes the portion of compound financial liabilities that qualify for
treatment as equity.
• Retained earnings, which corresponds to earnings of the Bank carried over from previous years;
• Other reserves (originary reserve, special reserve and other reserves).
6.33. Earnings per share
Basic earnings per share are calculated by dividing the net income attributable to the shareholders
of the parent company by the weighted average number of ordinary shares outstanding during the
period.
For the calculation of diluted earnings per share, the weighted average number of ordinary shares
outstanding is adjusted to reflect the impact of all potential dilutive ordinary shares, such as those
resulting from convertible debt and share options granted to employees. The dilution effect translates
into a decrease in earnings per share, based on the assumption that the convertible instruments will be
converted or the options granted will be exercised.
6.34. The accounting standards and interpretations
The accounting standards and interpretations recently issued but not yet effective and that the Bank
has not yet applied in the preparation of its financial statements may be analyzed as follows:
Standards, interpretations, amendments and revisions that become effective in future
years:
The following standards, interpretations, amendments and revisions, with mandatory application in
future financial years, have, up to the date of approval of these financial statements, been adopted
(“endorsed”) by the European Union:
Norm / Interpretation
Applicable in the European
Union for fiscal years beginning
on or after
Description
Amendments to IFRS 3 - References to the Framework
for Financial Reporting
1-jan-2022
This amendment updates the references to the Framework in the text of IFRS 3, with no changes being made to the accounting requirements for business combinations.
It also clarifies the accounting treatment to be adopted in respect of liabilities and contingent liabilities under IAS 37 and IFRIC 21, incurred separately versus those included in a business
combination.
The amendment is of prospective application.
Amendments to IAS 16 - Income Earned Before Start
out
1-jan-2022
Clarifies the accounting treatment given to the consideration obtained with the sale of products that result from the production in test phase of tangible fixed assets, prohibiting their
deduction from the acquisition cost of the assets. The entity recognizes the income obtained from the sale of such products and the costs of their production in results.
Amendments to IAS 37 - Onerous Contracts - costs of
fulfilling a contract
1-jan-2022
Amendments to IFRS 1 - Subsidiary as a first-time
adopter of IFRS (included in the annual improvements
for the 2018-2020 cycle)
Amendments to IFRS 9 - Derecognition of financial
liabilities - Fees to be included in the ‘10 per cent’
change test (included in the annual improvements for
the 2018 2020 cycle)
Amendments to IAS 41 - Taxation and fair value
measurement (included in the annual improvements for
the 2018-2020 cycle)
1-jan-2022
1-jan-2022
This amendment specifies that in assessing whether or not a contract is onerous, only expenses directly related to the performance of the contract can be considered, such as incremental
costs related to direct labor and materials and the allocation of other directly related expenses such as the allocation of depreciation expenses for tangible assets used to perform the
contract.
General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly charged to the counterparty in accordance with the contract.
This amendment should be applied to contracts that, at the beginning of the first annual reporting period to which the amendment is applied, still include unfulfilled contractual obligations,
without restating the comparative.
This improvement clarifies that when the subsidiary chooses to measure its assets and liabilities at the amounts included in the parent company’s consolidated financial statements
(assuming no adjustment to the consolidation process has occurred), the measurement of the cumulative translation differences of all foreign operations can be made at the amounts that
would be recorded in the consolidated financial statements, based on the parent company’s date of transition to IFRS.
This improvement clarifies which fees an entity should include when assessing whether the terms of a financial liability are substantially different from the terms of the original financial
liability. This improvement clarifies that, when performing derecognition tests on renegotiated liabilities, only fees paid or received between the debtor and the creditor should be included,
including fees paid or received by the debtor or the creditor on behalf of the other.
1-jan-2022
This improvement eliminates the requirement to exclude tax cash flows in the fair value measurement of biological assets, ensuring consistency with the principles of IFRS 13 - Fair Value.
IFRS 17 - Insurance Contracts
1-jan-2023
IFRS 17 applies to all insurance contracts (i.e. life, non-life, direct insurance and reinsurance), regardless of the type of entity that issues them, as well as some guarantees and some financial
instruments with discretionary participation features. In general terms, IFRS 17 provides an accounting model for insurance contracts that is more useful and more consistent for issuers. In
contrast to the requirements of IFRS 4, which are based on previously adopted local accounting policies, IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant
accounting aspects.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes The Bank did not early adopt any of these standards in its financial statements for the year ended
December 31, 2021. No significant impacts on the financial statements are expected as a result of their
adoption.
Standards, interpretations, amendments and revisions not yet adopted by the European
Union
The following standards, interpretations, amendments and revisions, with mandatory application in
future financial years, have not been, until the date of approval of these financial statements, adopted
(“endorsed”) by the European Union:
Norm / Interpretation
Description
Amendments to IAS 1 – Presentation of financial
statements - Classification of current and non-current
liabilities
This amendment aims to clarify the classification of liabilities as current or non-current balances depending on the rights that an entity has to defer its payment, at the end of each reporting period.
The classification of liabilities is not affected by the entity’s expectations (the assessment should determine whether a right exists, but should not consider whether the entity will or will not exercise that right), or by events
occurring after the reporting date, such as the breach of a “covenant”.
However, if the right to defer settlement for at least twelve months is subject to certain conditions being met after the reporting date, those criteria do not affect the right to defer settlement for the purpose of classifying a
liability as current or noncurrent.
This amendment also includes a new definition of “settlement” of a liability and is retrospective.
Amendments to IAS 8 – Definition of accounting
estimates
The amendment clarifies the distinction between change in accounting estimate, change in accounting policy and correction of errors. In addition, it clarifies how an entity uses measurement techniques and inputs to develop
accounting estimates.
Amendments to IAS 1 – Disclosure of accounting
policies
These amendments are intended to assist the entity in disclosing ‘material’ accounting policies, previously referred to as ‘significant’ policies. However, due to the absence of this concept in IFRS, it was decided to replace it by
the concept “materiality”, a concept already known to users of financial statements.
In assessing the materiality of accounting policies, the entity has to consider not only the size of the transactions but also other events or conditions and the nature of these.
Amendments to IAS 12 – Deferred tax related to assets
and liabilities arising from a single transaction
The amendments clarify that payments that settle a liability are tax deductible, however it is a matter of professional judgment whether such deductions are attributable to the liability that is recognized in the financial
statements or the related asset. This is important in determining whether there are temporary differences in the initial recognition of the asset or liability.
According to these amendments, the initial recognition exception is not applicable to transactions that have given rise to equal taxable and deductible temporary differences. It only applies if the recognition of a leasing asset
and a leasing liability gives rise to taxable and deductible temporary differences that are not equal.
Amendments to IFRS 17 – Insurance Contracts - Initial
application of IFRS 17 and IFRS 9 - Comparative
Information
This amendment to IFRS 17 relates to the presentation of comparative information for financial assets in the initial application of IFRS 17.
The amendment adds a transition option that allows an entity to apply an ‘overlay’ to the classification of a financial asset in the comparative period(s) presented in initially applying IFRS 17. The overlay allows all financial assets,
including those held in relation to non-contractual activities within the scope of IFRS 17 to be classified, instrument by instrument, in the comparative period(s) in a manner aligned with how the entity expects those assets to
be classified on initial application of IFRS 9.
These standards have not yet been endorsed by the European Union and, as such, have not been
applied by the Bank for the year ended December 31, 2021. No significant impacts on the financial
statements are expected as a result of their adoption.
NOTE 7 – MAIN ACCOUNTING ESTIMATES
AND JUDGEMENTS USED IN PREPARING THE
FINANCIAL STATEMENTS
Considering that the current accounting framework requires applying judgements and calculating
estimates involving some degree of subjectivity, the use of different parameters or judgements based
on different evidence may result in different estimates. The main accounting estimates and judgments
used in applying the accounting principles by the Bank are discussed in this Note to improve the
understanding of how their application affects the reported results of the Bank and its disclosure.
The COVID-19 pandemic, despite the government and regulatory response measures adopted, resulted
in an additional high level of uncertainty about the Portuguese and European economy and in particular
banking activity, with an impact on the judgments and estimates used in the financial statements.
However, the internal control policies and standards adopted by the Bank allow us to consider that
these judgments and estimates were made independently and appropriately as at 31 December 2021.
The relevant judgments made by Management in the application of the Bank’s accounting policies and
the main sources of uncertainty in the estimates were the same as those described in the last report of
the Financial Statements.
7.1. Impairment of financial assets at amortized cost and at fair
value through other comprehensive income
The critical judgements with greater impact on the recognized impairment values for the financial
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes assets at amortized cost and at fair value through other comprehensive income are the following:
• Assessment of the business model: the measurement and classification of financial assets depends
on the results of SPPI test and on the business model setting. The Bank determines its business model
based on how it manages the financial assets and its business objectives. The Bank monitors if the
business model classification is appropriate based on the analysis on the anticipated derecognition
of the assets at amortized cost or at fair value through other comprehensive income, assessing if it
is necessary to prospectively apply any changes;
determination of the assumptions used in these models, including the assumptions related with the
main credit risk drivers.
Consequently, the use of a different methodology or different assumptions or judgements in applying a
particular model could have produced different financial results, summarized in Note 38.
7.3. Corporate income taxes
• Significant increase on the credit risk: as mentioned on the accounting policy 6.16, the determination
of the transfer of an asset from stage 1 to stage 2 with the purpose of determining the respective
impairment is made based on the judgement that, in accordance to the Bank management,
constitutes a significant increase on credit risk;
The Bank is subject to corporate income tax in numerous jurisdictions. Certain interpretations and
estimates are required in determining the overall corporate income tax amount. Different interpretations
and estimates could result in a different level of income tax, current and deferred, being recognized in
the period and evidenced in Note 27.
• Classification of default: the internal definition of exposure in default is broadly in line with the
regulatory definition in Article 178 of CRR/CRD IV. This regulation defines qualitative criteria for
assessing the default classification – unlikely to pay -, which are replicated in the internal definition
implemented by novobanco and which result in performing judgements when assessing the high
probability that the borrower does not fulfil its obligations within the conditions agreed with
novobanco. This concept is covered in more detail below;
• Definition of groups of financial assets with similar credit risk characteristics: when the expected
credit losses are measured through collective model, the financial instruments are aggregated based
on the same risk characteristics. The Bank monitors the credit risk characteristics in order to assure
the correct reclassification of the assets, in cases of changes on the credit risk characteristics;
• Models and assumptions: the Bank uses several models and assumptions on the measurement of
the expected credit losses. The judgement is applied on the identification of the more appropriate
model for each type of asset as well as in the determination of the assumptions used in these models,
including the assumptions related with the main credit risk drivers. In addition, in compliance with
the IFRS 9 regulation that clarifies the need for the impairment result to consider multiple scenarios,
a methodology for incorporating different scenarios into the risk parameters was implemented.
Thus, the calculation of collective impairment considers several scenarios with a specific weighting,
based on the internal methodology defined about scenarios - definition of multiple perspectives of
macroeconomic evolution, with probability of relevant occurrence.
7.2. Fair value of derivative financial instruments and other financial
assets and liabilities at fair value
Fair value is based on listed market prices when available; otherwise fair value is determined based
on similar recent arm’s length transaction prices or using valuation methodologies, based on the net
present value of estimated future cash flows taking into consideration market conditions, the time
value, the yield curve and volatility factors, in accordance with IFRS 13 - Fair Value Measurement. The
Bank uses several models and assumption in measuring the fair value of financial assets. Judgement
is applied on the identification of the more appropriate model for each type of asset as well as in the
This aspect assumes additional relevance for effects of the analysis of the recoverability of deferred
taxes, while the Bank considers forecasts of futures taxable profits based on a group of assumptions,
including the estimate of income before taxes, adjustments to the taxable income and its interpretation
of fiscal legislation. This way, the recoverability of deferred taxes depends on the concretization of the
strategy of the Executive Board of Directors, namely in the capacity to generate the estimated taxable
results and its interpretation of fiscal legislation.
The Tax Authorities are entitled to review the determination of the taxable income of the Bank during
a period of four years or twelve years, when there are tax loss carry forwards. Hence, it is possible that
some additional taxes may be assessed, mainly as a result of differences in interpretation of tax law.
However, it is the conviction of the Executive Board of Directors of the Bank, that there will be no
significant corrections to the corporate income taxes recorded in the financial statements.
7.4. Pensions and other employee benefits
The determination of the retirement pension liabilities presented in Note 15 requires the use of
assumptions and estimates, including the use of actuarial tables, assumptions regarding the growth
of pensions, salaries and discounts rates (which are determined based on the market rates associated
with high quality corporate bond, denominated in the same currency in which the benefits will be paid
and with a maturity similar to the expiry date of the plan’s obligations). These assumptions are based
on the expectations of the novobanco for the period during which the liabilities will be settled as well
as other factors that may impact the costs and liabilities of the pension plan.
Changes in these assumptions could materially affect the amounts determined.
7.5. Provisions and Contingent liabilities
The recognition of provisions involves a significant degree of complex judgment, namely identifying
whether there is a present obligation and estimating the probability and timing, as well as quantifying
the outflows that may arise from past events. When events are at an early stage, judgments and
estimates can be difficult to quantify due to the high degree of uncertainty involved. The Executive
341
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Board of Directors monitors these matters as they develop to regularly reassess whether the provisions
should be recognized. However, it is often not feasible to make estimates, even when events are already
at a more advanced stage, due to existing uncertainties.
The complexity of such issues often requires expert professional advice in determining estimates,
particularly in terms of legal and regulatory issues. The amount of recognized provisions may also
be sensitive to the assumptions used, which may result in a variety of potential results that require
judgment in order to determine a level of provision that is considered appropriate in view of the event
in question.
7.7 Significant judgment in determining contract lease term
The Bank has applied judgment to determine the lease term of certain agreements, in which it acts
as lessee, and which include renewal and termination options. The Bank determines the lease term as
the non-cancellable lease term, together with any periods covered by an option to extend the lease if
it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if
reasonably certain not to be exercised. This assessment will have an impact on the lease term, which
will significantly affect the amount of the lease liabilities and recognized right-of-use assets.
7.6. Investment properties, Foreclosed assets and Non-current
assets held for sale
Foreclosed assets and Non-current assets held for sale are measured at the lower of the net book
value and the fair value less costs to sell.
The Bank has the option, namely in real estate lease agreements, to lease assets for additional periods
from 1 month to 20 years. The Bank applies judgment in assessing whether it is reasonably right to
exercise the renewal option. That is, it considers all the relevant factors that create an economic
incentive for renewal.
The fair value of these assets is determined based on valuations carried out by independent entities
specializing in this type of service, using the market, income or cost methods defined in Note 6.18. The
valuation reports are analyzed internally, namely comparing the sales values with the revalued values of
the properties to maintain the valuation parameters and processes aligned with the market evolution.
NOTE 8 – NET INTEREST INCOME
The use of alternative methodologies and different assumptions could result in a different level of fair
value with an impact on the respective balance sheet amount recognized.
The breakdown of this caption as at 31 December 2021 and 2020 is as follows:
NOTE 8 – NET INTEREST INCOME
The breakdown of this caption as at 31 December 2021 and 2020 is as follows:
31.12.2021
31.12.2020
Calculated by the effective interest method
Other
Calculated by the effective interest method
Other
From assets /
liabilities at
amortised cost
From assets /
liabilities at fair
value through
other
comprehensive
income
Income/expens
es from
negative
interest rates
From assets /
liabilities at fair
value through
profit or loss
Total
From assets /
liabilities at
amortised cost
From assets /
liabilities at fair
value through
other
comprehensive
income
Income/expens
es from
negative
interest rates
From assets /
liabilities at fair
value through
profit or loss
Total
(in thousands of Euros)
Interest Income
Interest from loans and advances
Interest from deposits with and loans and
advances to banks
Interest from securities
Interest from derivatives
Other interest and similar income
Interest Expenses
Interest on debt securities issued
Interest on amounts due to customers
Interest on deposits from Central Banks and
other banks
Interest on subordinated liabilities
Interest on derivatives
Other interest and similar expenses
484 946
12 922
-
497 868
508 045
13 344
-
-
75 062
-
39 401
14 033
65 266
-
441
564 686
36 513
50 231
8 937
34 168
-
6 940
136 789
427 897
70 982
-
-
83 904
-
-
-
-
-
-
-
83 904
-
-
18 631
4 730
-
-
1 579
-
89 095
154 879
6 309
441
19 835
59 987
-
509
76 641
23 361
748 592
588 376
-
-
11 380
-
6 980
1 051
19 411
57 230
-
-
-
36 513
50 231
34 206
69 990
20 317
26 620
-
11 308
-
11 308
12 053
34 168
18 288
7 991
167 508
581 084
34 165
-
7 463
172 444
415 932
81 067
-
-
94 411
-
-
-
-
-
-
-
-
1 669
-
-
-
2 750
-
5 771
331
8 852
94 411
32 218
-
-
27 709
8 545
-
521 389
59 236
168 763
10 214
509
-
-
-
-
10 816
-
10 816
25 438
34 206
69 990
29 370
34 165
16 587
7 794
192 112
567 999
41 070
36 254
760 111
On 31 December 2021, interest from loans and advances to customers includes Euro 31 037 thousand related to financial lease
operations (31 December 2020: Euro 35 385 thousand).
In relation to repurchase agreement operations, interests from deposits from Other banks includes, as of December 31, 2021, the
amount of Euro 2,300 thousand (31 December 2020: Euro -16 thousand in customer deposits and Euro 822 thousand in interest from
deposits of other banks).
342
Interest income and expense items related to derivative interest include interest from hedging derivatives and from derivatives used
to manage the economic risk of certain financial assets and liabilities designated at fair value through profit or loss, as per the
accounting policies described in Notes 6.10.6 e 6.10.7.
NOTE 9 – DIVIDEND REVENUE
The breakdown of this caption is as follows:
Financial assets mandatorily at fair value through profit or loss
Shares
Euronext NV
Visa Inc CL C
Others
Participation Units
Explorer III B
Fundo Solução Arrendamento
Others
Shares
FLITPTREL X
SIBS SGPS
ESA Energia
Others
Unicre
Locarent
Edenred
ESEGUR
Financial assets at fair value through other comprehensive income
Financial assets in investments in associates and subsidiaries
(in thousands of Euros)
31.12.2021
31.12.2020
2 146
1 801
226
119
7 604
7 604
-
-
-
1 062
785
275
2
7 588
6 322
518
660
88
1 765
1 391
261
113
5 324
634
3 141
1 549
7 750
6 000
887
657
206
2 089
-
958
583
548
31
18 400
16 928
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 8 – NET INTEREST INCOME
NOTE 8 – NET INTEREST INCOME
The breakdown of this caption as at 31 December 2021 and 2020 is as follows:
The breakdown of this caption as at 31 December 2021 and 2020 is as follows:
31.12.2021
31.12.2021
31.12.2020
31.12.2020
(in thousands of Euros)
(in thousands of Euros)
Calculated by the effective interest method
Calculated by the effective interest method
Other
Calculated by the effective interest method
Calculated by the effective interest method
Other
Other
Other
From assets /
liabilities at
amortised cost
From assets /
liabilities at fair
value through
comprehensive
other
income
From assets /
Income/expens
From assets /
es from
liabilities at
negative
amortised cost
interest rates
From assets /
liabilities at fair
Income/expens
liabilities at fair
value through
value through
other
Total
es from
negative
comprehensive
profit or loss
interest rates
From assets /
From assets /
liabilities at fair
liabilities at
value through
amortised cost
profit or loss
income
From assets /
liabilities at fair
Total
value through
comprehensive
other
income
Income/expens
From assets /
es from
liabilities at
negative
amortised cost
interest rates
From assets /
liabilities at fair
value through
value through
other
income
From assets /
liabilities at fair
Income/expens
From assets /
Total
es from
negative
liabilities at fair
value through
Total
comprehensive
profit or loss
interest rates
profit or loss
Interest Income
Interest Income
Interest from loans and advances
Interest from loans and advances
484 946
12 922
484 946
-
12 922
-
497 868
-
508 045
-
497 868
13 344
508 045
-
13 344
-
521 389
-
Interest from deposits with and loans and
advances to banks
Interest from securities
Interest from derivatives
Other interest and similar income
Interest from deposits with and loans and
-
14 033
advances to banks
65 266
Interest from securities
Interest from derivatives
-
441
Other interest and similar income
70 982
-
-
75 062
14 033
65 266
-
-
1 579
-
441
-
-
89 095
75 062
19 835
-
-
89 095
39 401
19 835
-
-
59 236
39 401
70 982
18 631
-
4 730
-
-
154 879
-
1 579
6 309
441
-
18 631
59 987
4 730
-
509
-
154 879
81 067
6 309
-
-
441
59 987
-
-
1 669
-
509
81 067
27 709
-
8 545
-
-
168 763
-
1 669
10 214
509
-
-
-
27 709
8 545
-
521 389
59 236
168 763
10 214
509
564 686
83 904
76 641
564 686
23 361
83 904
748 592
76 641
588 376
23 361
94 411
748 592
41 070
588 376
36 254
94 411
760 111
41 070
36 254
760 111
Interest Expenses
Interest Expenses
Interest on debt securities issued
Interest on debt securities issued
36 513
Interest on amounts due to customers
Interest on amounts due to customers
50 231
-
-
-
36 513
-
50 231
-
-
-
-
36 513
-
34 206
-
50 231
-
69 990
-
36 513
-
-
50 231
-
34 206
-
69 990
-
-
-
-
34 206
-
69 990
-
-
-
34 206
69 990
-
8 937
11 380
8 937
Interest on deposits from Central Banks and
other banks
Interest on subordinated liabilities
Interest on derivatives
Other interest and similar expenses
Interest on deposits from Central Banks and
other banks
On 31 December 2021, interest from loans and advances to customers includes Euro 31 037 thousand
34 165
-
-
-
-
Interest on subordinated liabilities
-
-
5 771
11 308
6 980
Interest on derivatives
related to financial lease operations (31 December 2020: Euro 35 385 thousand).
331
-
7 463
1 051
-
Other interest and similar expenses
172 444
8 852
11 308
-
415 932
32 218
NOTE 10 – FEES AND COMMISSIONS INCOME AND EXPENSES
19 411
In relation to repurchase agreement operations, interests from deposits from Other banks includes, as
57 230
of December 31, 2021, the amount of Euro 2,300 thousand (31 December 2020: Euro -16 thousand in
On 31 December 2021, interest from loans and advances to customers includes Euro 31 037 thousand related to financial lease
customer deposits and Euro 822 thousand in interest from deposits of other banks).
operations (31 December 2020: Euro 35 385 thousand).
On 31 December 2021, interest from loans and advances to customers includes Euro 31 037 thousand related to financial lease
The breakdown of this caption is as follows:
operations (31 December 2020: Euro 35 385 thousand).
NOTE 10 – FEES AND COMMISSIONS INCOME
AND EXPENSES
NOTE 10 – FEES AND COMMISSIONS INCOME AND EXPENSES
The breakdown of this caption is as follows:
The breakdown of this caption is as follows:
34 165
-
11 308
-
7 463
-
-
-
-
10 816
-
-
34 168
-
18 288
-
-
7 991
34 168
18 288
7 991
-
10 816
-
34 168
-
-
6 980
1 051
6 940
34 168
-
6 940
34 165
16 587
7 794
34 165
16 587
7 794
-
5 771
331
57 230
427 897
19 411
136 789
427 897
136 789
192 112
567 999
192 112
567 999
172 444
415 932
581 084
-
167 508
94 411
581 084
167 508
10 816
-
25 438
94 411
12 053
83 904
83 904
2 750
26 620
12 053
11 380
29 370
29 370
26 620
-
20 317
10 816
32 218
25 438
11 308
20 317
2 750
8 852
-
-
-
-
-
-
-
-
-
-
Interest income and expense items related to derivative interest include interest from hedging
In relation to repurchase agreement operations, interests from deposits from Other banks includes, as of December 31, 2021, the
derivatives and from derivatives used to manage the economic risk of certain financial assets and
amount of Euro 2,300 thousand (31 December 2020: Euro -16 thousand in customer deposits and Euro 822 thousand in interest from
Fees and commissions income
deposits of other banks).
liabilities designated at fair value through profit or loss, as per the accounting policies described in
Notes 6.10.6 e 6.10.7.
In relation to repurchase agreement operations, interests from deposits from Other banks includes, as of December 31, 2021, the
amount of Euro 2,300 thousand (31 December 2020: Euro -16 thousand in customer deposits and Euro 822 thousand in interest from
deposits of other banks).
From banking services
From guarantees provided
From transaction of securities
Interest income and expense items related to derivative interest include interest from hedging derivatives and from derivatives used
From commitments to third parties
to manage the economic risk of certain financial assets and liabilities designated at fair value through profit or loss, as per the
From transactions carried out on behalf of third parties - cross-selling
accounting policies described in Notes 6.10.6 e 6.10.7.
Other fee and commission income
Interest income and expense items related to derivative interest include interest from hedging derivatives and from derivatives used
to manage the economic risk of certain financial assets and liabilities designated at fair value through profit or loss, as per the
accounting policies described in Notes 6.10.6 e 6.10.7.
From banking services
From guarantees provided
From transaction of securities
From commitments to third parties
From transactions carried out on behalf of third parties - cross-selling
Other fee and commission income
Fees and commissions income
NOTE 9 – DIVIDEND REVENUE
NOTE 9 – DIVIDEND REVENUE
NOTE 9 – DIVIDEND REVENUE
The breakdown of this caption is as follows:
The breakdown of this caption is as follows:
The breakdown of this caption is as follows:
Fees and commissions expenses
Fees and commissions expenses
With banking services rendered by third parties
With guarantees received
With transaction of securities
(in thousands of Euros)
Other fee and commission income
With banking services rendered by third parties
With guarantees received
With transaction of securities
Other fee and commission income
(in thousands of Euros)
Financial assets mandatorily at fair value through profit or loss
Financial assets mandatorily at fair value through profit or loss
Shares
Euronext NV
Visa Inc CL C
Others
Shares
Euronext NV
Visa Inc CL C
Others
Participation Units
Participation Units
Explorer III B
Fundo Solução Arrendamento
Others
Explorer III B
Fundo Solução Arrendamento
Others
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income
Shares
Shares
FLITPTREL X
SIBS SGPS
ESA Energia
Others
FLITPTREL X
SIBS SGPS
ESA Energia
Others
Financial assets in investments in associates and subsidiaries
Financial assets in investments in associates and subsidiaries
Unicre
Locarent
Edenred
ESEGUR
Unicre
Locarent
Edenred
ESEGUR
31.12.2021
31.12.2020
31.12.2021
31.12.2020
2 146
1 801
226
119
7 604
7 604
-
-
1 062
-
785
275
2
7 588
6 322
518
660
88
1 765
1 391
261
113
5 324
634
3 141
1 549
2 146
1 801
226
119
7 604
7 604
-
-
7 750
6 000
887
657
206
1 062
-
785
275
2
7 588
2 089
-
6 322
958
518
583
660
548
88
1 765
1 391
261
113
5 324
634
3 141
1 549
7 750
6 000
887
657
206
2 089
-
958
583
548
18 400
16 928
18 400
16 928
31
31
(in thousands of Euros)
(in thousands of Euros)
31.12.2021
31.12.2020
31.12.2021
31.12.2020
205 914
32 654
4 657
7 997
33 434
2 357
287 013
31 309
1 564
2 195
5 228
40 296
246 717
198 376
34 762
3 718
8 062
32 254
2 706
279 878
31 497
1 755
2 259
5 927
41 438
238 440
205 914
32 654
4 657
7 997
33 434
2 357
287 013
31 309
1 564
2 195
5 228
40 296
246 717
198 376
34 762
3 718
8 062
32 254
2 706
279 878
31 497
1 755
2 259
5 927
41 438
238 440
343
32
32
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 11 – GAINS OR LOSSES ON FINANCIAL OPERATIONS
NOTE 11 – GAINS OR LOSSES ON FINANCIAL OPERATIONS
The breakdown of this caption is as follows:
The breakdown of this caption is as follows:
Gains or losses on financial assets and liabilities not measured at fair value through
profit or loss
Of financial assets at fair value through other comprehensive income
Securities
Obrigações e outros títulos de rendimento fixo
Bonds and other fixed income securities
De emissores públicos
Issued by government and public entities
De outros emissores
Issued by other entities
Of financial assets and liabilities at amortized cost
Securities
Obrigações e outros títulos de rendimento fixo
Bonds and other fixed income securities
De outros emissores
Issued by other entities
Credit
Crédito
Gains or losses on financial assets and liabilities held for trading
Securities
Títulos
Obrigações e outros títulos de rendimento fixo
Bonds and other fixed income securities
De emissores públicos
Issued by government and public entities
De outros emissores
Issued by other entities
Derivative financial instruments
Contratos sobre taxas de câmbio
Exchange rates contracts
Contratos sobre taxas de juro
Interest rate contracts
Contratos sobre ações/índices
Equity / Index contracts
Contratos sobre créditos
Credit default contracts
Outros
Other
Gains or losses on financial assets mandatorily
at fair value through profit or loss
Securities
Obrigações e outros títulos de rendimento fixo
Bonds and other fixed income securities
De outros emissores
Issued by other entities
31.12.2021
31.12.2020
Gains
Losses
Total
Gains
Losses
Total
(in thousands of Euros)
15 088
11 021
12 758
1 073
2 330
9 948
93 160
1 010
6 529
7 482
86 631
( 6 472)
26 109
13 831
12 278
94 170
14 011
80 159
-
142
( 142)
6 281
154
6 127
12 639
32 009
( 19 370)
8 336
8 439
( 103)
12 639
32 151
( 19 512)
14 617
8 593
6 024
38 748
45 892
( 7 234)
108 787
22 604
86 183
3 252
43
14 507
20
( 11 255)
23
13 710
5
13 121
-
589
5
59 419
422 828
31 440
16
4 179
62 526
358 646
30 638
18
3 600
( 3 107)
64 182
802
( 2)
579
68 245
602 631
82 551
42
488
52 681
711 014
81 243
44
777
15 564
( 108 383)
1 308
( 2)
( 289)
521 177
469 955
51 222
767 672
858 880
( 91 208)
26 377
6 714
19 663
17 920
90 440
( 72 520)
Shares
25 726
457
25 269
23 229
141 374
( 118 145)
Other variable income securities
46 328
48 526
( 2 198)
1 709
332 103
( 330 394)
Gains or losses from hedge accounting
Changes in fair value of the hedge instrument
Interest rate contracts
98 431
55 697
42 734
42 858
563 917
( 521 059)
89 031
41 945
47 086
75 803
97 972
( 22 169)
Changes in fair value of the hedged item attributable to the hedged risk
Instrumentos financeiros derivados
9 732
41 922
( 32 190)
43 804
33 688
10 116
Exchange rate revaluation
98 763
83 867
14 896
119 607
131 660
( 12 053)
1 115 721 1 105 068
10 653
1 282 775 1 284 775
( 2 000)
1 872 840 1 760 569
112 271
2 321 699 2 861 836
( 540 137)
Gains or losses on financial assets and financial liabilities held for trading
In accordance with the accounting policy described in Note 6.5, financial instruments are initially recorded at fair value. It is deemed
that the best evidence of the fair value of the instrument at inception is the transaction price. However, in certain circumstances, the
fair value of a financial instrument at inception, determined based on valuation techniques, may differ from the transaction price,
namely due to the existence of an intermediation fee, originating a day one profit.
344
The Bank recognizes in its income statement the gains arising from the intermediation fee (day one profit), which is generated,
primarily, through currency and derivative financial product intermediation, given that the fair value of these instruments, both at
inception and subsequently, is determined based solely on observable market data and reflects the Bank’s access to the (wholesale
market).
As at 31 December 2021, gains recognized in the income statement arising from intermediation fees, which are essentially related to
foreign exchange transactions, amounted to approximately Euro 1,800 thousand (31 December 2020: Euro 5,037 thousand).
33
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Gains or losses on financial assets and financial liabilities held for trading
Gains or losses on financial assets mandatorily at fair value through profit or loss
In accordance with the accounting policy described in Note 6.5, financial instruments are initially
recorded at fair value. It is deemed that the best evidence of the fair value of the instrument at inception
is the transaction price. However, in certain circumstances, the fair value of a financial instrument at
inception, determined based on valuation techniques, may differ from the transaction price, namely
due to the existence of an intermediation fee, originating a day one profit.
As at 31 December 2020, gains or losses on financial assets mandatorily at fair value through profit or loss – securities – shares and
other variable income securities, include a loss of Euro 300.2 million, resulting from the completion of an independent valuation to the
restructuring funds. These funds are “level 3” assets in accordance with the fair value hierarchy of IFRS 13 (quotes provided by third
parties whose parameters used are not observable in the market). novobanco requested an independent assessment from an
international consulting firm in conjunction with real estate consulting firms. This work resulted in a market value of Euro 498.8 million
for the total investment held in these assets (see Note 22), which led to the recording of the said loss of Euro 300.2 million in 2020
(see Note 38).
The Bank recognizes in its income statement the gains arising from the intermediation fee (day one
profit), which is generated, primarily, through currency and derivative financial product intermediation,
given that the fair value of these instruments, both at inception and subsequently, is determined based
Gains or losses on hedge
solely on observable market data and reflects the Bank’s access to the (wholesale market).
Gains or losses on hedge accounting include the fair value variations of the hedging instrument
(derivative) and the fair value variations of the hedged item attributable to the hedged risk. In the
case where the hedge operations are interrupted early, there may occur the payment/receipt of
compensation, which is recorded in Other operating expenses/ Other operating income. As at 31
December 2021, the amount of compensation received amounted to Euro 1,726 thousand (31 December
2020: Euro 10,181 thousand).
Gains or losses on hedge
assessment from an international consulting firm in conjunction with real estate consulting firms. This
work resulted in a market value of Euro 498.8 million for the total investment held in these assets (see
Note 22), which led to the recording of the said loss of Euro 300.2 million in 2020 (see Note 38).
As at 31 December 2021, gains recognized in the income statement arising from intermediation fees,
which are essentially related to foreign exchange transactions, amounted to approximately Euro 1,800
thousand (31 December 2020: Euro 5,037 thousand).
Gains or losses on hedge accounting include the fair value variations of the hedging instrument (derivative) and the fair value
variations of the hedged item attributable to the hedged risk. In the case where the hedge operations are interrupted early, there may
occur the payment/receipt of compensation, which is recorded in Other operating expenses/ Other operating income. As at 31
December 2021, the amount of compensation received amounted to Euro 1,726 thousand (31 December 2020: Euro 10,181
thousand).
Exchange differences
This caption includes the results arising from the foreign currency revaluation of monetary assets and
liabilities denominated in foreign currency in accordance with the accounting policy described in Note 6.1.
Gains or losses on financial assets mandatorily at fair value through profit or
loss
Exchange differences
As at 31 December 2020, gains or losses on financial assets mandatorily at fair value through profit
or loss – securities – shares and other variable income securities, include a loss of Euro 300.2 million,
resulting from the completion of an independent valuation to the restructuring funds. These funds are
“level 3” assets in accordance with the fair value hierarchy of IFRS 13 (quotes provided by third parties
whose parameters used are not observable in the market). novobanco requested an independent
The breakdown of this caption is as follows:
NOTE 12 – GAINS OR LOSSES ON DERECOGNITION OF NON-FINANCIAL ASSETS
This caption includes the results arising from the foreign currency revaluation of monetary assets and liabilities denominated in foreign
currency in accordance with the accounting policy described in Note 6.1.
NOTE 12 – GAINS OR LOSSES ON DERECOGNITION
OF NON-FINANCIAL ASSETS
The breakdown of this caption is as follows:
Real Estate
Equipment
Others
(in thousands of Euros)
31.12.2021
31.12.2020
( 5 372)
294
495
( 4 582)
2 625
( 307)
( 46)
2 272
In the year 2021, as part of the reorganization of the Real Estate Funds held by the novobanco Group, the Bank sold properties of
its own service and received in donation to the Real Estate Funds, recording a net loss of 10.6 million euros.
In the year 2021, as part of the reorganization of the Real Estate Funds held by the novobanco Group,
the Bank sold properties of its own service and received in donation to the Real Estate Funds, recording
a net loss of 10.6 million euros.
NOTE 13 – OTHER OPERATING INCOME AND OTHER OPERATING EXPENSES
The breakdown of these captions is as follows:
Other operating income
Gains / (losses) on recoveries of loans
Non-recurring advisory services
Other income
Other operating expenses
Losses on the acquisition of debt issued by the Bank (see Note 29)
Direct and indirect taxes
Contribution to the Banking Sector (see Note 26)
Membership subscriptions and donations
Charges with Supervisory entities
Contractual Indemnities (SPE)
Other expenses
Other operating income / (expenses)
(in thousands of Euros)
31.12.2021
31.12.2020
26 310
355
53 088
79 753
( 73 451)
( 3 877)
( 33 424)
( 1 923)
( 1 849)
( 1 723)
( 25 298)
( 141 545)
( 61 792)
29 596
264
57 739
87 599
( 19)
( 5 175)
( 32 193)
( 1 580)
( 2 321)
( 86)
( 48 505)
( 89 879)
( 2 280)
345
As at 31 December 2021, the amount received as compensation for discontinued hedging operations, included in other income,
amounts to Euro 1,726 thousand (31 December 2020: Euro 10,181 thousand) (see Note 11).
Pursuant to Law No. 55-A/2010, of 31 December, a Bank Levy was established, which is levied on the average annual liabilities
recorded on the balance sheet net of own funds and of deposits covered by the guarantee of the Deposit Guarantee Fund and on
the national amount of derivative financial instruments, and whose regime has been extended.
As at 31 December 2021, novobanco recognized Banking Levy charges as a cost in the amount of Euro 28,334 thousand (31
December 2020: Euro 26,981 thousand). The cost recognized as at 31 December 2021 has been calculated and paid based on the
maximum rate of 0.110% levied on the average annual liabilities recorded on the balance sheet, net of own funds and deposits
34
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Gains or losses on financial assets mandatorily at fair value through profit or loss
As at 31 December 2020, gains or losses on financial assets mandatorily at fair value through profit or loss – securities – shares and
other variable income securities, include a loss of Euro 300.2 million, resulting from the completion of an independent valuation to the
restructuring funds. These funds are “level 3” assets in accordance with the fair value hierarchy of IFRS 13 (quotes provided by third
parties whose parameters used are not observable in the market). novobanco requested an independent assessment from an
international consulting firm in conjunction with real estate consulting firms. This work resulted in a market value of Euro 498.8 million
for the total investment held in these assets (see Note 22), which led to the recording of the said loss of Euro 300.2 million in 2020
Gains or losses on hedge accounting include the fair value variations of the hedging instrument (derivative) and the fair value
variations of the hedged item attributable to the hedged risk. In the case where the hedge operations are interrupted early, there may
occur the payment/receipt of compensation, which is recorded in Other operating expenses/ Other operating income. As at 31
December 2021, the amount of compensation received amounted to Euro 1,726 thousand (31 December 2020: Euro 10,181
This caption includes the results arising from the foreign currency revaluation of monetary assets and liabilities denominated in foreign
currency in accordance with the accounting policy described in Note 6.1.
NOTE 12 – GAINS OR LOSSES ON DERECOGNITION OF NON-FINANCIAL ASSETS
The breakdown of this caption is as follows:
(see Note 38).
Gains or losses on hedge
thousand).
Exchange differences
Real Estate
Equipment
Others
(in thousands of Euros)
31.12.2021
31.12.2020
( 5 372)
294
495
( 4 582)
2 625
( 307)
( 46)
2 272
NOTE 13 – OTHER OPERATING INCOME AND
OTHER OPERATING EXPENSES
The breakdown of these captions is as follows:
The breakdown of these captions is as follows:
NOTE 13 – OTHER OPERATING INCOME AND OTHER OPERATING EXPENSES
In the year 2021, as part of the reorganization of the Real Estate Funds held by the novobanco Group, the Bank sold properties of
its own service and received in donation to the Real Estate Funds, recording a net loss of 10.6 million euros.
Other operating income
Gains / (losses) on recoveries of loans
Non-recurring advisory services
Other income
Other operating expenses
Losses on the acquisition of debt issued by the Bank (see Note 29)
Direct and indirect taxes
Contribution to the Banking Sector (see Note 26)
Membership subscriptions and donations
Charges with Supervisory entities
Contractual Indemnities (SPE)
Other expenses
Other operating income / (expenses)
(in thousands of Euros)
31.12.2021
31.12.2020
26 310
355
53 088
79 753
( 73 451)
( 3 877)
( 33 424)
( 1 923)
( 1 849)
( 1 723)
( 25 298)
( 141 545)
( 61 792)
29 596
264
57 739
87 599
( 19)
( 5 175)
( 32 193)
( 1 580)
( 2 321)
( 86)
( 48 505)
( 89 879)
( 2 280)
As at 31 December 2021, the amount received as compensation for discontinued hedging operations, included in other income,
amounts to Euro 1,726 thousand (31 December 2020: Euro 10,181 thousand) (see Note 11).
As at 31 December 2021, the amount received as compensation for discontinued hedging operations,
included in other income, amounts to Euro 1,726 thousand (31 December 2020: Euro 10,181 thousand)
(see Note 11).
Pursuant to Law No. 55-A/2010, of 31 December, a Bank Levy was established, which is levied on the
average annual liabilities recorded on the balance sheet net of own funds and of deposits covered
by the guarantee of the Deposit Guarantee Fund and on the national amount of derivative financial
instruments, and whose regime has been extended.
Pursuant to Law No. 55-A/2010, of 31 December, a Bank Levy was established, which is levied on the average annual liabilities
recorded on the balance sheet net of own funds and of deposits covered by the guarantee of the Deposit Guarantee Fund and on
the national amount of derivative financial instruments, and whose regime has been extended.
As at 31 December 2021, novobanco recognized Banking Levy charges as a cost in the amount of Euro 28,334 thousand (31
December 2020: Euro 26,981 thousand). The cost recognized as at 31 December 2021 has been calculated and paid based on the
maximum rate of 0.110% levied on the average annual liabilities recorded on the balance sheet, net of own funds and deposits
34
financial instruments. Its settlement is carried out until the end of June of the year following the year
to which the surcharge relates. A transitional regime was established for the year 2020 and 2021,
the settlement of which was carried out in accordance with the following rules: (i)The reserve base is
calculated by reference to the half-yearly average of the final balances of each month, which correspond
in the accounts for the first half of 2020, in the case of the solidarity surcharge due in 2020, and in the
accounts for the second half of 2020 in the case of the solidarity surcharge due in 2021, published in
compliance with the obligation established in Bank of Portugal Notice No. 1/2019; (ii) Settlement is
carried out by the taxable person through the declaration to be sent until 15 December 2020 and 2021,
respectively, with payment due on the same dates.
As at 31 December 2021, novobanco recognized Banking Levy charges as a cost in the amount of Euro
28,334 thousand (31 December 2020: Euro 26,981 thousand). The cost recognized as at 31 December
2021 has been calculated and paid based on the maximum rate of 0.110% levied on the average annual
liabilities recorded on the balance sheet, net of own funds and deposits covered by the guarantee of
the Deposit Guarantee Fund, approved by Law No. 7-A/2016, of 30 March and by Ordinance No. 165-
A/2016, of 14 June.
In 2020, following one of the measures provided for in Economic and Social Stabilization Program
(SSPE) and following the art. 18 of Law no. 27 -A / 2020, of July 24, the Solidarity Additional on the
Banking Sector was created, which, similarly to what happens with the Contribution on the Banking
Sector, is levied on the average annual liability calculated balance sheet deducted from own funds and
deposits covered by the Deposit Guarantee Fund guarantee and on the notional value of derivative
As at 31 December 2021, the Bank recognized as an expense in relation to the Solidarity Additional on
the Banking Sector the amount of Euro 5,090 thousand (31 December 2020: Euro 5,212 thousand).
The recognized expense was calculated and paid based on the maximum rate of 0.02% which is levied
on the average annual liability calculated on the balance sheet less the own funds and deposits covered
by the Deposit Guarantee Fund guarantee.
NOTE 14 – STAFF EXPENSES
The breakdown of these captions is as follows:
346
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
covered by the guarantee of the Deposit Guarantee Fund, approved by Law No. 7-A/2016, of 30 March and by Ordinance No. 165-
A/2016, of 14 June.
covered by the guarantee of the Deposit Guarantee Fund, approved by Law No. 7-A/2016, of 30 March and by Ordinance No. 165-
In 2020, following one of the measures provided for in Economic and Social Stabilization Program (SSPE) and following the art. 18
A/2016, of 14 June.
of Law no. 27 -A / 2020, of July 24, the Solidarity Additional on the Banking Sector was created, which, similarly to what happens with
the Contribution on the Banking Sector, is levied on the average annual liability calculated balance sheet deducted from own funds
In 2020, following one of the measures provided for in Economic and Social Stabilization Program (SSPE) and following the art. 18
and deposits covered by the Deposit Guarantee Fund guarantee and on the notional value of derivative financial instruments. Its
of Law no. 27 -A / 2020, of July 24, the Solidarity Additional on the Banking Sector was created, which, similarly to what happens with
settlement is carried out until the end of June of the year following the year to which the surcharge relates. A transitional regime was
the Contribution on the Banking Sector, is levied on the average annual liability calculated balance sheet deducted from own funds
established for the year 2020 and 2021, the settlement of which was carried out in accordance with the following rules: (i)The reserve
and deposits covered by the Deposit Guarantee Fund guarantee and on the notional value of derivative financial instruments. Its
base is calculated by reference to the half-yearly average of the final balances of each month, which correspond in the accounts for
settlement is carried out until the end of June of the year following the year to which the surcharge relates. A transitional regime was
the first half of 2020, in the case of the solidarity surcharge due in 2020, and in the accounts for the second half of 2020 in the case
of the solidarity surcharge due in 2021, published in compliance with the obligation established in Bank of Portugal Notice No. 1/2019;
established for the year 2020 and 2021, the settlement of which was carried out in accordance with the following rules: (i)The reserve
(ii) Settlement is carried out by the taxable person through the declaration to be sent until 15 December 2020 and 2021, respectively,
base is calculated by reference to the half-yearly average of the final balances of each month, which correspond in the accounts for
with payment due on the same dates.
the first half of 2020, in the case of the solidarity surcharge due in 2020, and in the accounts for the second half of 2020 in the case
of the solidarity surcharge due in 2021, published in compliance with the obligation established in Bank of Portugal Notice No. 1/2019;
As at 31 December 2021, the Bank recognized as an expense in relation to the Solidarity Additional on the Banking Sector the amount
(ii) Settlement is carried out by the taxable person through the declaration to be sent until 15 December 2020 and 2021, respectively,
of Euro 5,090 thousand (31 December 2020: Euro 5,212 thousand). The recognized expense was calculated and paid based on the
with payment due on the same dates.
maximum rate of 0.02% which is levied on the average annual liability calculated on the balance sheet less the own funds and
deposits covered by the Deposit Guarantee Fund guarantee.
As at 31 December 2021, the Bank recognized as an expense in relation to the Solidarity Additional on the Banking Sector the amount
of Euro 5,090 thousand (31 December 2020: Euro 5,212 thousand). The recognized expense was calculated and paid based on the
maximum rate of 0.02% which is levied on the average annual liability calculated on the balance sheet less the own funds and
NOTE 14 – STAFF EXPENSES
deposits covered by the Deposit Guarantee Fund guarantee.
The breakdown of these captions is as follows:
NOTE 14 – STAFF EXPENSES
The breakdown of these captions is as follows:
Wages and salaries
Remuneration
Long-term service / Career bonuses (see Note 15)
Mandatory social charges
Wages and salaries
Costs with post-employment benefits (see Note 15)
Remuneration
Other costs
Long-term service / Career bonuses (see Note 15)
Mandatory social charges
Costs with post-employment benefits (see Note 15)
Other costs
The provisions and costs related to the restructuring process are presented in Note 31.
(in thousands of Euros)
31.12.2021
31.12.2020
31.12.2021
164 816
164 285
531
45 940
164 816
769
164 285
3 469
531
214 994
45 940
769
3 469
214 994
(in thousands of Euros)
31.12.2020
167 702
166 758
944
51 170
167 702
432
166 758
4 300
944
223 604
51 170
432
4 300
223 604
31.12.2021
31.12.2020
394
431
1 869
1 224
394
3 918
431
1 869
1 224
384
485
2 036
1 351
384
4 256
485
2 036
1 351
The provisions and costs related to the restructuring process are presented in Note 31.
As at 31 December 2021 and 2020, the number of employees of the Bank, considering the staff and the contracted term, presents
the following breakdown by professional category:
The provisions and costs related to the restructuring process are presented in Note 31.
As at 31 December 2021 and 2020, the number of employees of the Bank, considering the staff and the
contracted term, presents the following breakdown by professional category:
As at 31 December 2021 and 2020, the number of employees of the Bank, considering the staff and the contracted term, presents
the following breakdown by professional category:
31.12.2021
31.12.2020
Directive functions
Management functions
Specific functions
Administrative and other functions
Directive functions
Management functions
Specific functions
Administrative and other functions
NOTE 15 –EMPLOYEE BENEFITS
3 918
4 256
NOTE 15 –EMPLOYEE BENEFITS
Pension and health-care benefits
As mentioned in accounting policy 6.26, the Bank has undertaken to provide its employees, or their
families, with cash benefits for old-age retirement, disability and survivors’ pensions and other liabilities
such as a Serviço de Assistência Médico-Social (SAMS), managed by the Union.
Pension and health-care benefits
As mentioned in accounting policy 6.26, the Bank has undertaken to provide its employees, or their families, with cash benefits for
NOTE 15 –EMPLOYEE BENEFITS
old-age retirement, disability and survivors’ pensions and other liabilities such as a Serviço de Assistência Médico-Social (SAMS),
managed by the Union.
Pension and health-care benefits
As mentioned in accounting policy 6.26, the Bank has undertaken to provide its employees, or their families, with cash benefits for
For employees hired until 31 December 2008, the retirement pension and the disability, survival and death pensions consecrated
old-age retirement, disability and survivors’ pensions and other liabilities such as a Serviço de Assistência Médico-Social (SAMS),
under the ACT, as well as the liabilities for health-care benefits (SAMS), are covered by a closed pension fund, managed by GNB –
managed by the Union.
Sociedade Gestora de Fundos de Pensões, S.A..
Retirement pensions of banking employees integrated in the General Social Security Regime within the
scope of the 2nd tripartite agreement continue to be calculated in accordance with the provisions of
the ACT and other conventions; however, banking employees are entitled to receive a pension under
the General Regime that considers the number of years of contributions under that regime. The Banks
are responsible for the difference between the pension determined in accordance with the provisions
of the ACT and that which the banking employees are entitled to receive from the Collective Bargaining
Agreement.
For employees hired until 31 December 2008, the retirement pension and the disability, survival and death pensions consecrated
Protection of employees in the event of maternity, paternity and adoption, as well as old age, is covered by the General Social Security
under the ACT, as well as the liabilities for health-care benefits (SAMS), are covered by a closed pension fund, managed by GNB –
Regime, given that with the publication of Decree-Law No. 1-A/2011, of 3 January, all banking employees who were beneficiaries of
Sociedade Gestora de Fundos de Pensões, S.A..
“CAFEB – Caixa de Abono de Família dos Empregados Bancários” were integrated in the General Social Security Regime as from
1 January 2011.
Protection of employees in the event of maternity, paternity and adoption, as well as old age, is covered by the General Social Security
Regime, given that with the publication of Decree-Law No. 1-A/2011, of 3 January, all banking employees who were beneficiaries of
Employees hired after 31 December 2008 are covered by the Portuguese General Social Security Regime.
“CAFEB – Caixa de Abono de Família dos Empregados Bancários” were integrated in the General Social Security Regime as from
1 January 2011.
Retirement pensions of banking employees integrated in the General Social Security Regime within the scope of the 2nd tripartite
agreement continue to be calculated in accordance with the provisions of the ACT and other conventions; however, banking
Employees hired after 31 December 2008 are covered by the Portuguese General Social Security Regime.
employees are entitled to receive a pension under the General Regime that considers the number of years of contributions under that
The contribution rate is 26.6%, 23.6% paid by the employer and 3% paid by the employees on the
behalf of Caixa de Abono de Família dos Empregados Bancários (CAFEB), abolished by said Decree-
law. In consequence of this change, pension entitlements of active employees are to be covered on the
terms defined under the General Social Security Regime, for the length of their employment between
1 January 2011 and their retirement date. The differential required to make up the pension guaranteed
under the ACT is paid by the Banks.
For employees hired until 31 December 2008, the retirement pension and the disability, survival and
death pensions consecrated under the ACT, as well as the liabilities for health-care benefits (SAMS), are
covered by a closed pension fund, managed by GNB – Sociedade Gestora de Fundos de Pensões, S.A..
Protection of employees in the event of maternity, paternity and adoption, as well as old age, is covered
by the General Social Security Regime, given that with the publication of Decree-Law No. 1-A/2011, of
3 January, all banking employees who were beneficiaries of “CAFEB – Caixa de Abono de Família dos
Empregados Bancários” were integrated in the General Social Security Regime as from 1 January 2011.
Employees hired after 31 December 2008 are covered by the Portuguese General Social Security
Regime.
35
Retirement pensions of banking employees integrated in the General Social Security Regime within the scope of the 2nd tripartite
agreement continue to be calculated in accordance with the provisions of the ACT and other conventions; however, banking
employees are entitled to receive a pension under the General Regime that considers the number of years of contributions under that
At the end of financial year 2011 and pursuant to the 3rd tripartite agreement, it was decided to transfer,
definitively and irreversibly, to the General Social Security Regime all the banks’ liabilities with pensions
in payment to retirees and pensioners that were in that condition as of 31 December 2011 at constant
35
347
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
values (0% discount rate) for the component foreseen in the “Instrumento de Regulação Coletiva de
Trabalho” (IRCT) applicable to banking employees, including the eventualities of death, disability and
survival. The liabilities relating to the updating of pension amounts, pension benefits other than those
to be borne by Social Security, health-care contributions to SAMS, death allowances and deferred
survivor’s pensions will remain under the banks’ responsibility, with the corresponding funding being
met through the respective pension funds.
The agreement further established that the financial institutions’ pension fund assets relating to the
part allocated to the satisfaction responsibilities for those pensions, be transferred to the State.
According to the deliberation of the Board of Directors of Bank of Portugal of 3 August 2014 (8 p.m.),
considering the resolution by the same Board of Directors of 11 August 2014 (5 p.m.), and the additional
clarifications contained in the deliberation of the Board of Directors of Bank of Portugal, of 11 February
2015, it was clarified that the BES responsibilities not transferred to novobanco relate to the retirement
and survival pensions and complementary retirement and survival pensions of the Directors of BES who
had been members of its Executive Committee, as defined in BES’s Articles of Association and BES’s
General Assembly Regulations to which the Articles of Association refer, not having, therefore, been
transferred to novobanco, without prejudice to the transfer of the responsibilities relating exclusively
to the employment contracts with BES.
Considering the foregoing, only the pension fund liabilities arising from the Complementary Executive
Committee Plan were split, with a part (described above) remaining in BES, with the other part being
transferred to NOVO BANCO, together with the Pension Fund’s liabilities relating to the Base Plan and
the Complementary Plan.
To quantify the amounts relating to the split of the Pension Fund assets allocated to the liabilities that
remained in BES, following the decision of Bank of Portugal of 11 February 2015, from those that were
transferred to novobanco, the assets existing on 3 August 2014 were split in proportion to the liabilities
calculated on the same date, allocated to each of the groups of former participants and beneficiaries
allocated to each of the entities. The split performed on these terms will result, on 3 August 2014, in a
level of funding of the Complementary Plan of the Executive Commission that is equal for each of the
associates of the Fund (novobanco and BES).
On June 16, 2020, the Insurance and Pension Funds Supervisory Authority (“ASF”) approved the
extinction of the portion that finances the Plan of the former Executive Committee and, simultaneously,
the amendment of the Constitutive Contract of the novobanco Pension Fund. This approval led to the
creation of three aspects of the Executive Committee’s Pension Plan: (i) Executive Committee - BES,
(ii) Executive Committee - NOVO BANCO and (iii) Undivided Party. The assets of the undivided party
are not allocated to any liability of novobanco or BES until the final decision of the court (limit of article
402º), so NOVO BANCO transferred the amount of Euro 19,.2 million of net liabilities of the amount of
the fund’s assets relating to the undivided portion for Provisions.
On 1 June 2016, an amendment was made to Fundo de Pensões NB´s constitutive contract, where the
complementary plan became a defined contribution instead of a defined benefit plan. Considering this,
and in accordance with IAS 19, this plan´s responsibilities and assets are net of the amounts presented
for the defined benefit plans.
On 31 December 2021, the amount of Euro 553 thousand was recorded in Personnel Costs related to
the defined contribution plan (31 December 2020: Euro 535 thousand).
During 2021, two changes were made to the Pension Fund:
• Inclusion of Social Security Pension – Pensioners
Until 2020, the methodology applied considered pensions in payment by the Pension Fund for the
calculation of liabilities with pensioners. In 2021, this methodology was changed for pensioners who
started a pension after 2011, and do not have a Social Security pension. For this group of pensioners
with age below the normal retirement age of the General Social Security Regime (RGSS), the liability
arising from a Social Security pension, to be paid from the normal retirement age of the RGSS, was
deducted. As for pensioners over the normal retirement age of the RGSS, the liability arising from a
Social Security pension, to be paid from the moment of assessment, was deducted.
• Inclusion of acquired rights (Clause 98 ACT)
In 2021, liabilities with former employees who left novobanco after 2011, and who can claim rights to
the Pension Fund under Clause 98 of the ACT, were included.
Pension plan participants are detailed as follows:
Pension plan participants are detailed as follows:
Employees
Pensioners and survivors
Participants under Clause 98
TOTAL
31.12.2021
31.12.2020
3 995
6 914
982
4 318
6 870
-
11 891
11 188
The Bank's liabilities and coverage levels, calculated in accordance with the accounting policy defined in Note 6.26 - Employee
benefits, reportable as at 31 December 2021 and 2020 are analyzed as follows:
According to the policy defined in Note 6.16 - Employee Benefits, the Bank calculates liabilities for pensions and actuarial gains and
losses half-yearly and evaluates at each balance sheet date and for each plan separately, the recoverability of the excess of the
respective pension liabilities.
The evolution of the actuarial gains and losses in the balance sheet can be analysed as follows:
Retirement pension liabilities at end of exercise
1 887 967
1 892 669
(1) includes 13.019 thousands of Euros from the assets and liabilities sale of the Spanish branch
Assets / (liabilities) recognized in the balance sheet
Total liabilities
Pensioners
Employees
Coverage
Fair value of plan assets
Net assets / (liabilities) in the balance sheet (see Note 32)
Accumulated actuarial deviations recognized in other comprehensive income
Retirement pension liabilities at beginning of exercise
Current service cost
Interest cost
Plan participants' contribution
Contributions from other entities
Actuarial (gains) / losses in the period:
- Changes in financial assumptions
- Experience adjustments (gains) / losses
Pensions paid by the fund / transfers and once-off bonuses
Amount of the responsabilities transferred to defined contribution plans
Social Security and Clause 98
Early retirement
Foreign exchange differences and other (1)
348
(in thousands of Euros)
31.12.2021
31.12.2020
(1 887 967)
(1 312 843)
( 575 124)
(1 892 669)
(1 345 899)
( 546 770)
1 865 405
1 867 977
( 22 562)
781 244
( 24 692)
705 595
(in thousands of Euros)
31.12.2021
31.12.2020
1 892 669
1 811 526
441
18 421
2 613
214
12 260
46 124
( 75 183)
-
( 35 463)
38 562
( 12 691)
432
23 425
2 577
232
99 466
49 382
( 72 200)
( 54 679)
-
31 592
916
37
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Pension plan participants are detailed as follows:
Pension plan participants are detailed as follows:
31.12.2021
31.12.2020
Employees
Pensioners and survivors
Participants under Clause 98
Employees
Pensioners and survivors
TOTAL
Participants under Clause 98
31.12.2021
3 995
6 914
31.12.2020
4 318
6 870
982
3 995
6 914
11 891
982
-
4 318
6 870
11 188
-
The Bank’s liabilities and coverage levels, calculated in accordance with the accounting policy defined in
Note 6.26 - Employee benefits, reportable as at 31 December 2021 and 2020 are analyzed as follows:
The Bank's liabilities and coverage levels, calculated in accordance with the accounting policy defined in Note 6.26 - Employee
benefits, reportable as at 31 December 2021 and 2020 are analyzed as follows:
11 891
11 188
TOTAL
The Bank's liabilities and coverage levels, calculated in accordance with the accounting policy defined in Note 6.26 - Employee
benefits, reportable as at 31 December 2021 and 2020 are analyzed as follows:
(in thousands of Euros)
31.12.2021
31.12.2020
Assets / (liabilities) recognized in the balance sheet
Total liabilities
Assets / (liabilities) recognized in the balance sheet
Pensioners
Employees
Total liabilities
Coverage
Pensioners
Fair value of plan assets
Employees
Coverage
Net assets / (liabilities) in the balance sheet (see Note 32)
Fair value of plan assets
Accumulated actuarial deviations recognized in other comprehensive income
Net assets / (liabilities) in the balance sheet (see Note 32)
(in thousands of Euros)
31.12.2021
(1 887 967)
31.12.2020
(1 892 669)
(1 312 843)
( 575 124)
(1 887 967)
(1 312 843)
1 865 405
( 575 124)
( 22 562)
1 865 405
781 244
( 22 562)
(1 345 899)
( 546 770)
(1 892 669)
(1 345 899)
1 867 977
( 546 770)
( 24 692)
1 867 977
705 595
( 24 692)
According to the policy defined in Note 6.16 - Employee Benefits, the Bank calculates liabilities for
pensions and actuarial gains and losses half-yearly and evaluates at each balance sheet date and for
each plan separately, the recoverability of the excess of the respective pension liabilities.
Accumulated actuarial deviations recognized in other comprehensive income
According to the policy defined in Note 6.16 - Employee Benefits, the Bank calculates liabilities for pensions and actuarial gains and
losses half-yearly and evaluates at each balance sheet date and for each plan separately, the recoverability of the excess of the
respective pension liabilities.
According to the policy defined in Note 6.16 - Employee Benefits, the Bank calculates liabilities for pensions and actuarial gains and
losses half-yearly and evaluates at each balance sheet date and for each plan separately, the recoverability of the excess of the
The evolution of the actuarial gains and losses in the balance sheet can be analysed as follows:
respective pension liabilities.
705 595
781 244
The evolution of the actuarial gains and losses in the balance sheet can be analysed as follows:
The evolution of the actuarial gains and losses in the balance sheet can be analysed as follows:
Retirement pension liabilities at beginning of exercise
Current service cost
Interest cost
Retirement pension liabilities at beginning of exercise
Plan participants' contribution
Current service cost
Contributions from other entities
Interest cost
Actuarial (gains) / losses in the period:
Plan participants' contribution
- Changes in financial assumptions
Contributions from other entities
- Experience adjustments (gains) / losses
Actuarial (gains) / losses in the period:
Pensions paid by the fund / transfers and once-off bonuses
- Changes in financial assumptions
Amount of the responsabilities transferred to defined contribution plans
- Experience adjustments (gains) / losses
Social Security and Clause 98
Pensions paid by the fund / transfers and once-off bonuses
Early retirement
Amount of the responsabilities transferred to defined contribution plans
Foreign exchange differences and other (1)
Social Security and Clause 98
Early retirement
Retirement pension liabilities at end of exercise
Foreign exchange differences and other (1)
(1) includes 13.019 thousands of Euros from the assets and liabilities sale of the Spanish branch
Retirement pension liabilities at end of exercise
(1) includes 13.019 thousands of Euros from the assets and liabilities sale of the Spanish branch
(in thousands of Euros)
31.12.2021
31.12.2020
1 892 669
31.12.2021
(in thousands of Euros)
1 811 526
31.12.2020
441
18 421
1 892 669
2 613
441
214
18 421
2 613
12 260
214
46 124
( 75 183)
12 260
-
46 124
( 35 463)
( 75 183)
38 562
-
( 12 691)
( 35 463)
38 562
1 887 967
( 12 691)
432
23 425
1 811 526
2 577
432
232
23 425
2 577
99 466
232
49 382
( 72 200)
99 466
( 54 679)
49 382
-
( 72 200)
31 592
( 54 679)
916
-
31 592
1 892 669
916
1 887 967
1 892 669
349
37
37
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The evolution of the value of pension funds in the years ended 31 December 2021 and 2020 can be
analyzed as follows:
The evolution of the value of pension funds in the years ended 31 December 2021 and 2020 can be analyzed as follows:
The evolution of the value of pension funds in the years ended 31 December 2021 and 2020 can be analyzed as follows:
The evolution of the value of pension funds in the years ended 31 December 2021 and 2020 can be analyzed as follows:
31.12.2021
(in thousands of Euros)
31.12.2020
(in thousands of Euros)
Fair value of fund assets at beginning of exercise
- Share of the net interest on the assets
- Return on assets excluding net interest
- Share of the net interest on the assets
- Share of the net interest on the assets
- Return on assets excluding net interest
- Return on assets excluding net interest
Net return from the fund
Fair value of fund assets at beginning of exercise
Fair value of fund assets at beginning of exercise
Net return from the fund
Net return from the fund
Group contributions
Plan participants’ contributions
Group contributions
Pensions paid by the fund / transfers and once-off bonuses
Group contributions
Plan participants’ contributions
Transfer to Undivided Party
Plan participants’ contributions
Pensions paid by the fund / transfers and once-off bonuses
Foreign exchange differences and other (1)
Pensions paid by the fund / transfers and once-off bonuses
Transfer to Undivided Party
Transfer to Undivided Party
Foreign exchange differences and other (1)
Fund balance at the end of the year
Foreign exchange differences and other (1)
(1) includes 13.019 thousands of Euros from the assets and liabilities sale of the Spanish branch
Fund balance at the end of the year
Fund balance at the end of the year
(1) includes 13.019 thousands of Euros from the assets and liabilities sale of the Spanish branch
Pension fund assets can be analyzed as follows:
(1) includes 13.019 thousands of Euros from the assets and liabilities sale of the Spanish branch
Pension fund assets can be analyzed as follows:
Pension fund assets can be analyzed as follows:
Pension fund assets can be analyzed as follows:
1 867 977
31.12.2021
31.12.2021
( 1 718)
1 867 977
15 546
1 867 977
( 1 718)
( 17 264)
( 1 718)
15 546
84 735
15 546
( 17 264)
2 613
( 17 264)
84 735
( 75 183)
84 735
2 613
-
2 613
( 75 183)
( 13 019)
( 75 183)
-
-
1 865 405
( 13 019)
( 13 019)
1 865 405
1 865 405
(in thousands of Euros)
1 659 246
31.12.2020
31.12.2020
46 131
1 659 246
19 482
1 659 246
46 131
26 649
46 131
19 482
266 834
19 482
26 649
2 577
26 649
266 834
( 72 200)
266 834
2 577
( 35 523)
2 577
( 72 200)
912
( 72 200)
( 35 523)
( 35 523)
1 867 977
912
912
1 867 977
1 867 977
(in thousands of Euros)
Quoted
Total
Quoted
31.12.2021
Unquoted
31.12.2021
31.12.2021
Unquoted
Unquoted
(in thousands of Euros)
(in thousands of Euros)
Total
31.12.2020
Unquoted
31.12.2020
31.12.2020
Unquoted
Unquoted
-
51 214
Quoted
Quoted
Equity instruments
39 034
Total
Total
1 093 577
39 034
39 034
372 978
1 093 577
1 093 577
115 855
372 978
372 978
246 533
115 855
115 855
246 533
1 867 977
246 533
1 867 977
The pension fund assets used by the Bank or representative of securities issued by entities of the Group are detailed as follows:
1 867 977
Debt instruments
Equity instruments
Equity instruments
Investment funds
Debt instruments
Debt instruments
Real estate properties
Investment funds
Investment funds
Cash and cash equivalents
Real estate properties
Real estate properties
Cash and cash equivalents
Total
Cash and cash equivalents
Total
Total
Total
Total
1 171 603
51 214
51 214
359 503
1 171 603
1 171 603
150 344
359 503
359 503
132 741
150 344
150 344
132 741
1 865 405
132 741
1 865 405
1 865 405
1 171 603
-
-
258 990
1 171 603
1 171 603
-
258 990
258 990
-
-
-
-
1 430 593
-
1 430 593
1 430 593
1 093 577
39 034
39 034
306 217
1 093 577
1 093 577
-
306 217
306 217
-
-
-
-
1 438 828
-
1 438 828
1 438 828
-
-
-
66 761
-
-
115 855
66 761
66 761
246 533
115 855
115 855
246 533
429 149
246 533
429 149
429 149
-
51 214
51 214
100 513
-
-
150 344
100 513
100 513
132 741
150 344
150 344
132 741
434 812
132 741
434 812
434 812
Quoted
Quoted
51 214
39 034
-
The pension fund assets used by the Bank or representative of securities issued by entities of the Group are detailed as follows:
The pension fund assets used by the Bank or representative of securities issued by entities of the Group are detailed as follows:
(in thousands of Euros)
The pension fund assets used by the Bank or representative of securities issued by entities of the
Group are detailed as follows:
The key actuarial assumptions used to calculate retirement pension and health-care liabilities are identical and are as follows:
The key actuarial assumptions used to calculate retirement pension and health-care liabilities are identical and are as follows:
The key actuarial assumptions used to calculate retirement pension and health-care liabilities are identical and are as follows:
The key actuarial assumptions used to calculate retirement pension and health-care liabilities are
identical and are as follows:
Cash and Cash Equivalents
Real estate properties
Cash and Cash Equivalents
Cash and Cash Equivalents
Real estate properties
Total
Real estate properties
Total
Total
Actuarial Assumptions
Projected rate of return on plan assets
Actuarial Assumptions
Discount rate
Actuarial Assumptions
Projected rate of return on plan assets
Pension increase rate
Projected rate of return on plan assets
Discount rate
Salary increase rate
Discount rate
Pension increase rate
Mortality table men
Pension increase rate
Salary increase rate
Mortality table women
Salary increase rate
Mortality table men
Mortality table men
Mortality table women
Mortality table women
31.12.2021
31.12.2021
31.12.2021
41 827
31.12.2020
(in thousands of Euros)
(in thousands of Euros)
31.12.2020
31.12.2020
63 627
43 032
41 827
41 827
43 032
84 859
43 032
84 859
84 859
63 630
63 627
63 627
63 630
127 257
63 630
127 257
127 257
31.12.2021
31.12.2021
31.12.2021
Assumptions
Assumptions
Assumptions
1.35%
1.35%
1.35%
0.50%
1.35%
1.35%
0.75%
1.35%
0.50%
0.50%
0.75%
0.75%
Actual
Actual
Actual
-0.24%
-
-0.24%
0.36%
-0.24%
-
2.05%
-
0.36%
0.36%
2.05%
2.05%
31.12.2020
31.12.2020
31.12.2020
Assumptions
Assumptions
Assumptions
1.00%
1.00%
1.00%
0.25%
1.00%
1.00%
0.50%
1.00%
0.25%
0.25%
0.50%
0.50%
Actual
Actual
Actual
2.41%
-
2.41%
1.34%
2.41%
-
3.07%
-
1.34%
1.34%
3.07%
3.07%
TV 88/90
TV 88/90-3 years
TV 88/90
TV 88/90
TV 88/90-2 years
TV 88/90
Disability decreases are not considered in the calculation of the liabilities. The determination of the discount rate as of 31 December
2021 and 31 December 2020 was based on: (i) the evolution of the main indices for high quality corporate bonds and (ii) the duration
Disability decreases are not considered in the calculation of the liabilities. The determination of the discount rate as of 31 December
Disability decreases are not considered in the calculation of the liabilities. The determination of the discount rate as of 31 December
2021 and 31 December 2020 was based on: (i) the evolution of the main indices for high quality corporate bonds and (ii) the duration
of the liabilities.
2021 and 31 December 2020 was based on: (i) the evolution of the main indices for high quality corporate bonds and (ii) the duration
of the liabilities.
TV 88/90-3 years
TV 88/90
TV 88/90-3 years
TV 88/90-2 years
TV 88/90
TV 88/90-2 years
of the liabilities.
350
38
38
38
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The evolution of the value of pension funds in the years ended 31 December 2021 and 2020 can be analyzed as follows:
Fair value of fund assets at beginning of exercise
Net return from the fund
- Share of the net interest on the assets
- Return on assets excluding net interest
Group contributions
Plan participants’ contributions
Transfer to Undivided Party
Foreign exchange differences and other (1)
Fund balance at the end of the year
Pensions paid by the fund / transfers and once-off bonuses
(1) includes 13.019 thousands of Euros from the assets and liabilities sale of the Spanish branch
Pension fund assets can be analyzed as follows:
(in thousands of Euros)
31.12.2021
31.12.2020
1 867 977
1 659 246
( 1 718)
15 546
( 17 264)
84 735
2 613
( 75 183)
-
( 13 019)
46 131
19 482
26 649
266 834
2 577
( 72 200)
( 35 523)
912
1 865 405
1 867 977
Quoted
Total
Quoted
31.12.2021
Unquoted
31.12.2020
Unquoted
Equity instruments
Debt instruments
Investment funds
Real estate properties
Cash and cash equivalents
1 171 603
258 990
-
-
-
51 214
51 214
-
1 171 603
100 513
150 344
132 741
359 503
150 344
132 741
39 034
1 093 577
306 217
-
-
(in thousands of Euros)
Total
-
-
39 034
1 093 577
66 761
372 978
115 855
115 855
246 533
246 533
Total
1 430 593
434 812
1 865 405
1 438 828
429 149
1 867 977
The pension fund assets used by the Bank or representative of securities issued by entities of the Group are detailed as follows:
Cash and Cash Equivalents
Real estate properties
Total
(in thousands of Euros)
31.12.2021
31.12.2020
41 827
43 032
84 859
63 627
63 630
127 257
The key actuarial assumptions used to calculate retirement pension and health-care liabilities are identical and are as follows:
Actuarial Assumptions
Projected rate of return on plan assets
Discount rate
Pension increase rate
Salary increase rate
Mortality table men
Mortality table women
31.12.2021
31.12.2020
Assumptions
Actual
Assumptions
Actual
1.35%
1.35%
0.50%
0.75%
-0.24%
-
0.36%
2.05%
1.00%
1.00%
0.25%
0.50%
2.41%
-
1.34%
3.07%
TV 88/90
TV 88/90-3 years
TV 88/90
TV 88/90-2 years
Disability decreases are not considered in the calculation of the liabilities. The determination of the
discount rate as of 31 December 2021 and 31 December 2020 was based on: (i) the evolution of the
main indices for high quality corporate bonds and (ii) the duration of the liabilities.
Disability decreases are not considered in the calculation of the liabilities. The determination of the discount rate as of 31 December
2021 and 31 December 2020 was based on: (i) the evolution of the main indices for high quality corporate bonds and (ii) the duration
of the liabilities.
As at 31 December 2021 and 2020, the sensitivity analysis to a 0.25% change in the assumptions rate used and one year in the
mortality table results in the following changes in the current value of liabilities determined for past services:
As at 31 December 2021 and 2020, the sensitivity analysis to a 0.25% change in the assumptions rate
used and one year in the mortality table results in the following changes in the current value of liabilities
determined for past services:
As at 31 December 2021 and 2020, the sensitivity analysis to a 0.25% change in the assumptions rate used and one year in the
mortality table results in the following changes in the current value of liabilities determined for past services:
Change in the amount of liabilities due to the change:
Assumptions
Assumptions
Discount rate
Salary increase rate
Discount rate
Pension increase rate
Salary increase rate
Pension increase rate
Mortality table
31.12.2021
31.12.2021
of +0.25% in the
rate used
Change in the amount of liabilities due to the change:
of -0.25% in the
rate used
of +0.25% in the
rate used
( 72 318)
of +0.25% in the
rate used
13 336
76 890
of -0.25% in the
rate used
( 12 845)
( 72 395)
of +0.25% in the
rate used
26 348
(in thousands of Euros)
31.12.2020
31.12.2020
(in thousands of Euros)
of -0.25% in the
rate used
77 186
of -0.25% in the
rate used
( 16 750)
38
( 72 318)
67 955
76 890
( 63 608)
( 72 395)
56 848
77 186
( 52 114)
13 336
of +1 year
( 12 845)
of -1 year
26 348
of +1 year
( 16 750)
of -1 year
67 955
( 67 288)
( 63 608)
67 602
56 848
( 69 944)
( 52 114)
70 931
of +1 year
of -1 year
of +1 year
of -1 year
The evolution of actuarial deviations on the balance sheet can be analyzed as follows:
Mortality table
( 67 288)
67 602
The evolution of actuarial deviations on the balance sheet can be analyzed as follows:
The evolution of actuarial deviations on the balance sheet can be analyzed as follows:
Accumulated actuarial losses recognized in other comprehensive income at the beginning of the period
Actuarial (gains) / losses in the period:
- Changes in assumptions
Accumulated actuarial losses recognized in other comprehensive income at the beginning of the period
- Financial assumptions
Actuarial (gains) / losses in the period:
- Plan assets return (excluding net interest)
- Changes in assumptions
Other
- Financial assumptions
- Plan assets return (excluding net interest)
Accumulated actuarial losses recognized in other comprehensive income at the end of the period
Other
( 69 944)
70 931
(in thousands of Euros)
31.12.2021
31.12.2020
705 595
(in thousands of Euros)
583 396
31.12.2021
31.12.2020
705 595
12 260
63 388
1
12 260
63 388
781 244
1
583 396
99 466
22 733
-
99 466
22 733
705 595
-
The costs of retirement pensions and health benefits for the years ended 31 December 2021 and 2020 can be analyzed as follows:
Accumulated actuarial losses recognized in other comprehensive income at the end of the period
705 595
781 244
(in thousands of Euros)
The costs of retirement pensions and health benefits for the years ended 31 December 2021 and 2020 can be analyzed as follows:
31.12.2021
31.12.2020
351
Current service cost
Net interest
Early retirement
Current service cost
Cost with post-employment benefits
Net interest
Early retirement
The evolution of net assets / (liabilities) on the balance sheet can be analyzed in the years ended 31 December 2021 and 2020 as
Cost with post-employment benefits
follows:
432
3 943
-
432
4 375
3 943
-
441
2 875
328
441
3 644
2 875
328
31.12.2020
31.12.2021
4 375
3 644
(in thousands of Euros)
The evolution of net assets / (liabilities) on the balance sheet can be analyzed in the years ended 31 December 2021 and 2020 as
follows:
At the beginning of the exercise
Cost for period
Actuarial gains / (losses) recognized in other comprehensive income
At the beginning of the exercise
Undivided transfer and reduction of responsabilities
Actuarial gains / (losses) recognized in other comprehensive income
Contributions made in the period
Cost for period
Social Security and Clause 98
Contributions made in the period
Other
Undivided transfer and reduction of responsabilities
At the end of the exercise
Social Security and Clause 98
Other
At the end of the exercise
In 2021, the value of early retirements amounted to Euro 38.9 million (31 December 2020: Euro 31.6 million), which are part of the
Bank's restructuring process and, as such, they were recognized against the use of the provision for restructuring (see Note 31).
These amounts are considered in Other in the previous table.
In 2021, the value of early retirements amounted to Euro 38.9 million (31 December 2020: Euro 31.6 million), which are part of the
Bank's restructuring process and, as such, they were recognized against the use of the provision for restructuring (see Note 31).
These amounts are considered in Other in the previous table.
(in thousands of Euros)
31.12.2021
31.12.2020
( 24 692)
(in thousands of Euros)
( 152 280)
31.12.2021
( 3 644)
31.12.2020
( 4 375)
( 75 649)
( 24 692)
84 735
( 3 644)
( 75 649)
35 463
84 735
( 38 775)
-
-
( 22 562)
35 463
( 38 775)
( 22 562)
( 122 199)
( 152 280)
266 834
( 4 375)
19 155
( 122 199)
-
266 834
( 31 827)
19 155
( 24 692)
-
( 31 827)
( 24 692)
39
39
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
As at 31 December 2021 and 2020, the sensitivity analysis to a 0.25% change in the assumptions rate used and one year in the
mortality table results in the following changes in the current value of liabilities determined for past services:
As at 31 December 2021 and 2020, the sensitivity analysis to a 0.25% change in the assumptions rate used and one year in the
(in thousands of Euros)
mortality table results in the following changes in the current value of liabilities determined for past services:
Change in the amount of liabilities due to the change:
Assumptions
Assumptions
Discount rate
Salary increase rate
Discount rate
Pension increase rate
Salary increase rate
Pension increase rate
Mortality table
31.12.2021
31.12.2020
(in thousands of Euros)
of +0.25% in the
Change in the amount of liabilities due to the change:
of +0.25% in the
of -0.25% in the
of -0.25% in the
rate used
31.12.2021
rate used
rate used
31.12.2020
rate used
of +0.25% in the
( 72 318)
of -0.25% in the
76 890
of +0.25% in the
( 72 395)
of -0.25% in the
77 186
rate used
rate used
rate used
rate used
13 336
( 72 318)
67 955
13 336
67 955
( 67 288)
( 12 845)
76 890
( 63 608)
( 12 845)
( 63 608)
67 602
26 348
( 72 395)
56 848
26 348
56 848
( 69 944)
( 16 750)
77 186
( 52 114)
( 16 750)
( 52 114)
70 931
of +1 year
of -1 year
of +1 year
of -1 year
of +1 year
of -1 year
of +1 year
of -1 year
Mortality table
The evolution of actuarial deviations on the balance sheet can be analyzed as follows:
( 67 288)
67 602
( 69 944)
70 931
The evolution of actuarial deviations on the balance sheet can be analyzed as follows:
Accumulated actuarial losses recognized in other comprehensive income at the beginning of the period
Actuarial (gains) / losses in the period:
Accumulated actuarial losses recognized in other comprehensive income at the beginning of the period
- Changes in assumptions
- Financial assumptions
Actuarial (gains) / losses in the period:
- Plan assets return (excluding net interest)
- Changes in assumptions
Other
- Financial assumptions
- Plan assets return (excluding net interest)
Accumulated actuarial losses recognized in other comprehensive income at the end of the period
Other
(in thousands of Euros)
31.12.2021
31.12.2020
(in thousands of Euros)
705 595
31.12.2021
583 396
31.12.2020
705 595
12 260
63 388
1
12 260
63 388
781 244
1
583 396
99 466
22 733
-
99 466
22 733
705 595
-
The costs of retirement pensions and health benefits for the years ended 31 December 2021 and 2020
can be analyzed as follows:
Accumulated actuarial losses recognized in other comprehensive income at the end of the period
The costs of retirement pensions and health benefits for the years ended 31 December 2021 and 2020 can be analyzed as follows:
781 244
705 595
The costs of retirement pensions and health benefits for the years ended 31 December 2021 and 2020 can be analyzed as follows:
(in thousands of Euros)
Current service cost
Net interest
Early retirement
Current service cost
Net interest
Cost with post-employment benefits
Early retirement
31.12.2021
31.12.2020
(in thousands of Euros)
31.12.2021
441
2 875
328
441
2 875
3 644
328
31.12.2020
432
3 943
-
432
3 943
4 375
-
The evolution of net assets / (liabilities) on the balance sheet can be analyzed in the years ended 31
December 2021 and 2020 as follows:
Cost with post-employment benefits
The evolution of net assets / (liabilities) on the balance sheet can be analyzed in the years ended 31 December 2021 and 2020 as
follows:
(in thousands of Euros)
The evolution of net assets / (liabilities) on the balance sheet can be analyzed in the years ended 31 December 2021 and 2020 as
follows:
4 375
3 644
31.12.2021
At the beginning of the exercise
Cost for period
At the beginning of the exercise
Actuarial gains / (losses) recognized in other comprehensive income
Contributions made in the period
Cost for period
Undivided transfer and reduction of responsabilities
Actuarial gains / (losses) recognized in other comprehensive income
Social Security and Clause 98
Contributions made in the period
Other
Undivided transfer and reduction of responsabilities
Social Security and Clause 98
At the end of the exercise
Other
( 24 692)
31.12.2021
( 3 644)
( 24 692)
( 75 649)
84 735
( 3 644)
-
( 75 649)
35 463
84 735
( 38 775)
-
35 463
( 22 562)
( 38 775)
31.12.2020
(in thousands of Euros)
( 152 280)
31.12.2020
( 4 375)
( 152 280)
( 122 199)
266 834
( 4 375)
19 155
( 122 199)
-
266 834
( 31 827)
19 155
-
( 24 692)
( 31 827)
At the end of the exercise
In 2021, the value of early retirements amounted to Euro 38.9 million (31 December 2020: Euro 31.6 million), which are part of the
Bank's restructuring process and, as such, they were recognized against the use of the provision for restructuring (see Note 31).
These amounts are considered in Other in the previous table.
In 2021, the value of early retirements amounted to Euro 38.9 million (31 December 2020: Euro 31.6 million), which are part of the
Bank's restructuring process and, as such, they were recognized against the use of the provision for restructuring (see Note 31).
In 2021, the value of early retirements amounted to Euro 38.9 million (31 December 2020: Euro 31.6
These amounts are considered in Other in the previous table.
million), which are part of the Bank’s restructuring process and, as such, they were recognized against
the use of the provision for restructuring (see Note 31). These amounts are considered in Other in the
previous table.
The summary of the last five years of the funds’ liabilities and the funds balances, as well as experience gains and losses, is analyzed
as follows:
( 22 562)
( 24 692)
The summary of the last five years of the funds’ liabilities and the funds balances, as well as experience
gains and losses, is analyzed as follows:
Retirement pension liabilities
Funds balance
31.12.2021
31.12.2020
31.12.2019
31.12.2018
31.12.2017
(in thousands of Euros)
(1 887 967)
(1 892 669)
(1 811 526)
(1 641 964)
(1 629 305)
1 865 405
1 867 977
1 659 246
1 615 249
1 614 543
(Under) / overfunding of liabilities
( 22 562)
( 24 692)
( 152 280)
( 26 715)
( 14 762)
(Gains) / losses on experience adjustments in retirement pension liabilities
(Gains) / losses on experience adjustments in plan assets
46 124
17 264
49 382
63 084
( 26 649)
( 79 888)
18 400
52 175
39
14 859
( 91 005)
39
The average duration of defined benefit plan liabilities is approximately 16 years (31 December 2020: approximately 16 years).
The average duration of defined benefit plan liabilities is approximately 16 years (31 December 2020:
approximately 16 years).
Career Bonuses
As at 31 December 2021, the liabilities assumed by the Bank amounted to Euro 7,335 thousand, corresponding to the liabilities for
past services subjacent to the career bonuses, as described in Note 6.26 – Employee benefits (31 December 2020: Euro 7,465
thousand) (see Note 32).
In the financial year 2021, the costs recognized with career bonuses were Euro 531 thousand (31 December 2020: Euro 944
thousand) (see Note 14).
NOTE 16 – OTHER ADMINISTRATIVE EXPENSES
The breakdown of this caption is as follows:
352
Rentals
Advertising
Communication
Maintenance and repairs expenses
Travelling and representation
Transportation of valuables
Insurance
IT services
Independent work
Temporary work
Electronic payment systems
Legal costs
Consultancy and audit fees
Water, energy and fuel
Consumables
Other costs
Revisão Oficial de Contas
Outros serviços
Valor total dos serviços faturados
The caption Other costs includes, amongst others, specialised service costs incurred with security and surveillance, information
services, training and sundry external supplies.
As at 31 December 2021, rental costs includes an amount of Euro 582 thousand related to short-term operating lease contracts (31
December 2020: Euro 196 thousand), as described in Note 6.23.
The fees invoiced during the years 2021 and 2020 by the Statutory Audit Firm, according to that laid down in article 508-F of the
Portuguese Companies Code (Código das Sociedades Comerciais), have the following:
(in thousands of Euros)
31.12.2021
31.12.2020
5 716
5 426
8 637
8 026
1 399
3 079
5 162
36 845
1 355
902
10 084
3 402
20 982
2 867
1 318
16 781
2 246
5 799
9 360
8 523
1 210
4 354
3 020
43 196
2 080
1 287
10 593
4 699
23 589
3 053
1 404
19 618
131 981
144 031
(milhares de euros)
31.12.2021
31.12.2020
1 743
1 309
3 052
2 176
738
2 914
40
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The summary of the last five years of the funds’ liabilities and the funds balances, as well as experience gains and losses, is analyzed
The summary of the last five years of the funds’ liabilities and the funds balances, as well as experience gains and losses, is analyzed
as follows:
as follows:
Retirement pension liabilities
Retirement pension liabilities
Funds balance
Funds balance
31.12.2021
31.12.2021
31.12.2020
31.12.2020
31.12.2019
31.12.2019
31.12.2018
31.12.2018
31.12.2017
31.12.2017
(in thousands of Euros)
(in thousands of Euros)
(1 887 967)
(1 887 967)
(1 892 669)
(1 892 669)
(1 811 526)
(1 811 526)
(1 641 964)
(1 641 964)
(1 629 305)
(1 629 305)
1 865 405
1 865 405
1 867 977
1 867 977
1 659 246
1 659 246
1 615 249
1 615 249
1 614 543
1 614 543
(Under) / overfunding of liabilities
(Under) / overfunding of liabilities
( 22 562)
( 22 562)
( 24 692)
( 24 692)
( 152 280)
( 152 280)
( 26 715)
( 26 715)
( 14 762)
( 14 762)
(Gains) / losses on experience adjustments in retirement pension liabilities
(Gains) / losses on experience adjustments in retirement pension liabilities
(Gains) / losses on experience adjustments in plan assets
(Gains) / losses on experience adjustments in plan assets
46 124
46 124
17 264
17 264
49 382
49 382
( 26 649)
( 26 649)
63 084
63 084
( 79 888)
( 79 888)
18 400
18 400
52 175
52 175
14 859
14 859
( 91 005)
( 91 005)
The average duration of defined benefit plan liabilities is approximately 16 years (31 December 2020: approximately 16 years).
The average duration of defined benefit plan liabilities is approximately 16 years (31 December 2020: approximately 16 years).
Career Bonuses
Career Bonuses
Career Bonuses
As at 31 December 2021, the liabilities assumed by the Bank amounted to Euro 7,335 thousand, corresponding to the liabilities for
As at 31 December 2021, the liabilities assumed by the Bank amounted to Euro 7,335 thousand, corresponding to the liabilities for
past services subjacent to the career bonuses, as described in Note 6.26 – Employee benefits (31 December 2020: Euro 7,465
past services subjacent to the career bonuses, as described in Note 6.26 – Employee benefits (31 December 2020: Euro 7,465
thousand) (see Note 32).
thousand) (see Note 32).
In the financial year 2021, the costs recognized with career bonuses were Euro 531 thousand (31
December 2020: Euro 944 thousand) (see Note 14).
As at 31 December 2021, the liabilities assumed by the Bank amounted to Euro 7,335 thousand,
In the financial year 2021, the costs recognized with career bonuses were Euro 531 thousand (31 December 2020: Euro 944
In the financial year 2021, the costs recognized with career bonuses were Euro 531 thousand (31 December 2020: Euro 944
thousand) (see Note 14).
thousand) (see Note 14).
corresponding to the liabilities for past services subjacent to the career bonuses, as described in Note
6.26 – Employee benefits (31 December 2020: Euro 7,465 thousand) (see Note 32).
NOTE 16 – OTHER ADMINISTRATIVE EXPENSES
The breakdown of this caption is as follows:
NOTE 16 – OTHER ADMINISTRATIVE EXPENSES
NOTE 16 – OTHER ADMINISTRATIVE EXPENSES
The breakdown of this caption is as follows:
The breakdown of this caption is as follows:
Rentals
Rentals
Advertising
Advertising
Communication
Communication
Maintenance and repairs expenses
Maintenance and repairs expenses
Travelling and representation
Travelling and representation
Transportation of valuables
Transportation of valuables
Insurance
Insurance
IT services
IT services
Independent work
Independent work
Temporary work
Temporary work
Electronic payment systems
Electronic payment systems
Legal costs
Legal costs
Consultancy and audit fees
Consultancy and audit fees
Water, energy and fuel
Water, energy and fuel
Consumables
Consumables
Other costs
Other costs
(in thousands of Euros)
(in thousands of Euros)
31.12.2021
31.12.2021
31.12.2020
31.12.2020
5 716
5 716
5 426
5 426
8 637
8 637
8 026
8 026
1 399
1 399
3 079
3 079
5 162
5 162
36 845
36 845
1 355
1 355
902
902
10 084
10 084
3 402
3 402
20 982
20 982
2 867
2 867
1 318
1 318
16 781
16 781
2 246
2 246
5 799
5 799
9 360
9 360
8 523
8 523
1 210
1 210
4 354
4 354
3 020
3 020
43 196
43 196
2 080
2 080
1 287
1 287
10 593
10 593
4 699
4 699
23 589
23 589
3 053
3 053
1 404
1 404
19 618
19 618
131 981
131 981
144 031
144 031
The caption Other costs includes, amongst others, specialised service costs incurred with security and surveillance, information
The caption Other costs includes, amongst others, specialised service costs incurred with security and surveillance, information
services, training and sundry external supplies.
services, training and sundry external supplies.
The caption Other costs includes, amongst others, specialised service costs incurred with security and
surveillance, information services, training and sundry external supplies.
As at 31 December 2021, rental costs includes an amount of Euro 582 thousand related to short-term operating lease contracts (31
As at 31 December 2021, rental costs includes an amount of Euro 582 thousand related to short-term operating lease contracts (31
December 2020: Euro 196 thousand), as described in Note 6.23.
December 2020: Euro 196 thousand), as described in Note 6.23.
The fees invoiced during the years 2021 and 2020 by the Statutory Audit Firm, according to that laid
down in article 508-F of the Portuguese Companies Code (Código das Sociedades Comerciais), have
the following:
As at 31 December 2021, rental costs includes an amount of Euro 582 thousand related to short-term
operating lease contracts (31 December 2020: Euro 196 thousand), as described in Note 6.23.
The fees invoiced during the years 2021 and 2020 by the Statutory Audit Firm, according to that laid down in article 508-F of the
The fees invoiced during the years 2021 and 2020 by the Statutory Audit Firm, according to that laid down in article 508-F of the
Portuguese Companies Code (Código das Sociedades Comerciais), have the following:
Portuguese Companies Code (Código das Sociedades Comerciais), have the following:
Revisão Oficial de Contas
Revisão Oficial de Contas
Outros serviços
Outros serviços
Valor total dos serviços faturados
Valor total dos serviços faturados
31.12.2021
31.12.2021
(milhares de euros)
(milhares de euros)
31.12.2020
31.12.2020
1 743
1 743
1 309
1 309
3 052
3 052
2 176
2 176
738
738
2 914
2 914
40
40
353
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 17 – CONTRIBUTIONS TO RESOLUTION
FUNDS AND DEPOSIT GUARANTEE SCHEMES
This caption on 31 December 2021 and 2020 is analyzed as follows:
NOTE 17 – CONTRIBUTIONS TO RESOLUTION FUNDS AND DEPOSIT GUARANTEE SCHEMES
NOTE 17 – CONTRIBUTIONS TO RESOLUTION FUNDS AND DEPOSIT GUARANTEE SCHEMES
This caption on 31 December 2021 and 2020 is analyzed as follows:
This caption on 31 December 2021 and 2020 is analyzed as follows:
Contribution to the Fundo Único de Resolução
Contribution to the Fundo de Resolução Nacional
Contribution to the Fundo Único de Resolução
Contribution to the Fundo de Garantia de Depósitos
Contribution to the Fundo de Resolução Nacional
Contribution to the Fundo de Garantia de Depósitos
31.12.2021
31.12.2021
25 276
14 854
25 276
42
14 854
40 172
42
(in thousands of Euros)
31.12.2020
(in thousands of Euros)
31.12.2020
22 201
12 528
22 201
37
12 528
34 766
37
40 172
34 766
NOTE 18 – IMPAIRMENT
NOTE 18 – IMPAIRMENT
NOTE 18 – IMPAIRMENT
Reinforcements
31.12.2021
Replacements
31.12.2021
Total
Reinforcements
(in thousands of Euros)
31.12.2020
Replacements
31.12.2020
(in thousands of Euros)
Total
Provisions net of cancellations (see Note 31)
Reinforcements
Replacements
Total
Reinforcements
Replacements
Total
Provisions net of cancellations (see Note 31)
Provisions for guarantees
Provisions for commitments
Other provisions
Provisions for guarantees
Provisions for commitments
Other provisions
Impairments or reversal of impairments on financial assets not measured at fair value through
profit or loss (see Note 22)
Impairments or reversal of impairments on financial assets not measured at fair value through
profit or loss (see Note 22)
Securities at fair value through equity
Securities at amortized cost
Loans and advances to credit institutions
Securities at fair value through equity
Loans and advances to customers
Securities at amortized cost
Loans and advances to credit institutions
Loans and advances to customers
Impairments or reversal of impairments for investments in subsidiaries, joint ventures and
associates (see Note 24)
Impairments or reversal of impairments for investments in subsidiaries, joint ventures and
Impairments or reversal of impairments on non-financial assets
associates (see Note 24)
Impairments or reversal of impairments on non-financial assets
Non-current assets held for sale and Discontinued operations (see Note 29)
Property, plant and equipment (see Note 25)
Intangible assets (see Note 26)
Non-current assets held for sale and Discontinued operations (see Note 29)
Other assets (see Note 28)
Property, plant and equipment (see Note 25)
Intangible assets (see Note 26)
Other assets (see Note 28)
NOTE 19 – EARNINGS PER SHARE
18 435
10 630
159 330
18 435
188 395
10 630
159 330
188 395
1 252
1 215 623
135 018
1 252
289 202
1 215 623
1 641 095
135 018
289 202
1 641 095
-
-
10 000
-
-
10 000
17 543
-
27 543
-
1 857 033
17 543
27 543
( 31 191)
( 7 774)
( 37 660)
( 31 191)
( 76 625)
( 7 774)
( 37 660)
( 76 625)
( 895)
( 1 168 664)
( 133 210)
( 895)
( 142 096)
( 1 168 664)
( 1 444 865)
( 133 210)
( 142 096)
( 1 444 865)
( 49 691)
( 49 691)
-
( 1 617)
-
-
( 13 857)
( 1 617)
( 15 474)
-
( 1 586 655)
( 13 857)
( 15 474)
( 12 756)
2 856
121 670
( 12 756)
111 770
2 856
121 670
111 770
357
46 959
1 808
357
147 106
46 959
196 230
1 808
147 106
196 230
( 49 691)
( 49 691)
10 000
( 1 617)
-
10 000
3 686
( 1 617)
12 069
-
270 378
3 686
12 069
44 572
11 813
270 183
44 572
326 568
11 813
270 183
326 568
3 518
738 750
320 558
3 518
791 619
738 750
1 854 445
320 558
791 619
1 854 445
48 388
48 388
170 460
2 776
-
170 460
53 588
2 776
226 824
-
2 456 225
53 588
226 824
( 29 479)
( 5 311)
( 103 939)
( 29 479)
( 138 729)
( 5 311)
( 103 939)
( 138 729)
( 5 022)
( 696 383)
( 130 962)
( 5 022)
( 271 103)
( 696 383)
( 1 103 470)
( 130 962)
( 271 103)
( 1 103 470)
( 7 103)
( 7 103)
-
-
-
-
( 11 427)
-
( 11 427)
-
( 1 260 729)
( 11 427)
( 11 427)
15 093
6 502
166 244
15 093
187 839
6 502
166 244
187 839
( 1 504)
42 367
189 596
( 1 504)
520 516
42 367
750 975
189 596
520 516
750 975
41 285
41 285
170 460
2 776
-
170 460
42 161
2 776
215 397
-
1 195 496
42 161
215 397
1 857 033
( 1 586 655)
270 378
2 456 225
( 1 260 729)
1 195 496
NOTE 19 – EARNINGS PER SHARE
NOTE 19 – EARNINGS PER SHARE
Basic earnings per share
The basic earnings per share are calculated dividing the net profit attributable to the shareholders of the Bank by the weighted average
Basic earnings per share
number of ordinary shares in circulation during the financial year /period.
Basic earnings per share
The basic earnings per share are calculated dividing the net profit attributable to the shareholders of the Bank by the weighted average
The basic earnings per share are calculated dividing the net profit attributable to the shareholders of
number of ordinary shares in circulation during the financial year /period.
the Bank by the weighted average number of ordinary shares in circulation during the financial year /
period.
(in thousands of Euros)
(in thousands of Euros)
31.12.2021
31.12.2020
Net profit / (loss) attributable to shareholder of the Bank
Weighted average number of common shares outstanding (thousands)
Net profit / (loss) attributable to shareholder of the Bank
Weighted average number of common shares outstanding (thousands)
Basic earnings per share attributable to shareholders of novobanco (in Euros)
31.12.2021
225 908
31.12.2020
(1 374 246)
9 800 000
225 908
9 800 000
(1 374 246)
9 800 000
0.02
9 800 000
(0.14)
Basic earnings per share attributable to shareholders of novobanco (in Euros)
Basic earnings per share from continuing activities attributable to shareholders of novobanco (in Euros)
0.02
0.02
(0.14)
(0.14)
0.02
(0.14)
Basic earnings per share from continuing activities attributable to shareholders of novobanco (in Euros)
Diluted earnings per share
The diluted earnings per share are calculated considering the net profit attributable to the shareholders of the Bank and the weighted
Diluted earnings per share
average number of ordinary shares in circulation, adjusted for the effects of all potential dilutive ordinary shares.
The diluted earnings per share are calculated considering the net profit attributable to the shareholders of the Bank and the weighted
average number of ordinary shares in circulation, adjusted for the effects of all potential dilutive ordinary shares.
The diluted earnings per share do not differ from the basic earnings per share since there are no dilutive effects.
The diluted earnings per share do not differ from the basic earnings per share since there are no dilutive effects.
41
41
354
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 17 – CONTRIBUTIONS TO RESOLUTION FUNDS AND DEPOSIT GUARANTEE SCHEMES
This caption on 31 December 2021 and 2020 is analyzed as follows:
Contribution to the Fundo Único de Resolução
Contribution to the Fundo de Resolução Nacional
Contribution to the Fundo de Garantia de Depósitos
NOTE 18 – IMPAIRMENT
Provisions net of cancellations (see Note 31)
Provisions for guarantees
Provisions for commitments
Other provisions
profit or loss (see Note 22)
Securities at fair value through equity
Securities at amortized cost
Loans and advances to credit institutions
Loans and advances to customers
Impairments or reversal of impairments on non-financial assets
Non-current assets held for sale and Discontinued operations (see Note 29)
Property, plant and equipment (see Note 25)
Intangible assets (see Note 26)
Other assets (see Note 28)
NOTE 19 – EARNINGS PER SHARE
Impairments or reversal of impairments on financial assets not measured at fair value through
(in thousands of Euros)
31.12.2021
31.12.2020
25 276
14 854
42
40 172
22 201
12 528
37
34 766
31.12.2021
31.12.2020
Reinforcements
Replacements
Total
Reinforcements
Replacements
Total
(in thousands of Euros)
18 435
10 630
159 330
188 395
( 31 191)
( 7 774)
( 37 660)
( 76 625)
1 252
1 215 623
135 018
289 202
1 641 095
( 895)
( 1 168 664)
( 133 210)
( 142 096)
( 1 444 865)
( 12 756)
2 856
121 670
111 770
357
46 959
1 808
147 106
196 230
44 572
11 813
270 183
326 568
3 518
738 750
320 558
791 619
( 29 479)
( 5 311)
( 103 939)
( 138 729)
( 5 022)
( 696 383)
( 130 962)
( 271 103)
1 854 445
( 1 103 470)
15 093
6 502
166 244
187 839
( 1 504)
42 367
189 596
520 516
750 975
-
-
-
10 000
17 543
27 543
( 1 617)
-
-
( 13 857)
( 15 474)
10 000
( 1 617)
-
3 686
12 069
170 460
2 776
-
53 588
226 824
-
-
-
( 11 427)
( 11 427)
170 460
2 776
-
42 161
215 397
1 857 033
( 1 586 655)
270 378
2 456 225
( 1 260 729)
1 195 496
Impairments or reversal of impairments for investments in subsidiaries, joint ventures and
associates (see Note 24)
( 49 691)
( 49 691)
48 388
( 7 103)
41 285
Basic earnings per share
The basic earnings per share are calculated dividing the net profit attributable to the shareholders of the Bank by the weighted average
number of ordinary shares in circulation during the financial year /period.
Net profit / (loss) attributable to shareholder of the Bank
Weighted average number of common shares outstanding (thousands)
Basic earnings per share attributable to shareholders of novobanco (in Euros)
Basic earnings per share from continuing activities attributable to shareholders of novobanco (in Euros)
(in thousands of Euros)
31.12.2021
31.12.2020
225 908
(1 374 246)
9 800 000
9 800 000
0.02
0.02
(0.14)
(0.14)
Diluted earnings per share
The diluted earnings per share are calculated considering the net profit attributable to the shareholders of the Bank and the weighted
average number of ordinary shares in circulation, adjusted for the effects of all potential dilutive ordinary shares.
Diluted earnings per share
The diluted earnings per share are calculated considering the net profit attributable to the shareholders
of the Bank and the weighted average number of ordinary shares in circulation, adjusted for the effects
of all potential dilutive ordinary shares.
The diluted earnings per share do not differ from the basic earnings per share since there are no dilutive effects.
NOTE 20 – CASH, CASH BALANCES AT CENTRAL BANKS AND OTHER DEMAND DEPOSITS
NOTE 20 – CASH, CASH BALANCES AT CENTRAL
BANKS AND OTHER DEMAND DEPOSITS
As at 31 December 2021 and 31 December 2020, this caption is analysed as follows:
The diluted earnings per share do not differ from the basic earnings per share since there are no dilutive
effects.
As at 31 December 2021 and 31 December 2020, this caption is analysed as follows:
Cash
Demand Deposits in central banks
Bank of Portugal
Other Central Banks
Deposits in other credit institutions in the country
Repayable on demand
Uncollected checks
Deposits with banks abroad
Repayable on demand
(in thousands of Euros)
31.12.2021
31.12.2020
144 220
142 325
5 261 912
2 717
5 264 629
63 116
162 783
225 899
39 713
39 713
2 289 339
3 458
41
2 292 797
13 250
50 994
64 244
25 502
25 502
5 674 461
2 524 868
The caption Demand Deposits with Bank of Portugal includes mandatory deposits to comply with the
minimum legal cash reserve requirements in an amount of Euro 250.3 million (31 December 2020: Euro
262.2 million). According to the European Central Bank Regulation (EU) No. 1358/2011, of 14 December
2011, minimum cash requirements of demand deposits with Bank of Portugal are interest-bearing and
correspond to 1% of the deposits and debt certificates maturing in less than 2 years, after excluding
from these the deposits of institutions subject to the European System of Central Banks minimum
reserve requirements. As at 31 December 2021 and 2020, the average interest rate on these deposits
was null.
The caption Demand Deposits with Bank of Portugal includes mandatory deposits to comply with the minimum legal cash reserve
requirements in an amount of Euro 250.3 million (31 December 2020: Euro 262.2 million). According to the European Central Bank
Regulation (EU) No. 1358/2011, of 14 December 2011, minimum cash requirements of demand deposits with Bank of Portugal are
interest-bearing and correspond to 1% of the deposits and debt certificates maturing in less than 2 years, after excluding from these
the deposits of institutions subject to the European System of Central Banks minimum reserve requirements. As at 31 December
2021 and 2020, the average interest rate on these deposits was null.
Compliance with minimum cash requirements, for a given observation period, is monitored taking into
account the average amount of the deposits with Bank of Portugal over said period. The balance of the
account with Bank of Portugal as at 31 December 2021 was included in the observation period running
from 22 December 2021 to 08 February 2022.
Compliance with minimum cash requirements, for a given observation period, is monitored taking into account the average amount
of the deposits with Bank of Portugal over said period. The balance of the account with Bank of Portugal as at 31 December 2021
was included in the observation period running from 22 December 2021 to 08 February 2022.
Checks to be collected on credit institutions at home and abroad were sent for collection within the
first business days following the reference dates.
Checks to be collected on credit institutions at home and abroad were sent for collection within the first business days following the
reference dates.
NOTE 21 – FINANCIAL ASSETS AND LIABILITIES HELD FOR TRADING
As at 31 December 2021, and 31 December 2020, this caption is analysed as follows:
355
Financial assets held for trading
Securities
Securities held for trading
Bonds and other fixed income securities
Issued by government and public entities
Derivatives
Derivatives held for trading with positive fair value
Financial liabilities held for trading
Derivatives
Derivatives held for trading with negative fair value
(in thousands of Euros)
31.12.2021
31.12.2020
114 465
114 465
263 244
263 244
377 709
267 016
267 016
388 311
388 311
655 327
305 512
305 512
554 343
554 343
42
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 20 – CASH, CASH BALANCES AT CENTRAL BANKS AND OTHER DEMAND DEPOSITS
As at 31 December 2021 and 31 December 2020, this caption is analysed as follows:
Cash
Demand Deposits in central banks
Bank of Portugal
Other Central Banks
Deposits in other credit institutions in the country
Repayable on demand
Uncollected checks
Deposits with banks abroad
Repayable on demand
(in thousands of Euros)
31.12.2021
31.12.2020
144 220
142 325
5 261 912
2 289 339
2 717
3 458
5 264 629
2 292 797
63 116
162 783
225 899
39 713
39 713
13 250
50 994
64 244
25 502
25 502
5 674 461
2 524 868
The caption Demand Deposits with Bank of Portugal includes mandatory deposits to comply with the minimum legal cash reserve
requirements in an amount of Euro 250.3 million (31 December 2020: Euro 262.2 million). According to the European Central Bank
Regulation (EU) No. 1358/2011, of 14 December 2011, minimum cash requirements of demand deposits with Bank of Portugal are
interest-bearing and correspond to 1% of the deposits and debt certificates maturing in less than 2 years, after excluding from these
the deposits of institutions subject to the European System of Central Banks minimum reserve requirements. As at 31 December
2021 and 2020, the average interest rate on these deposits was null.
Compliance with minimum cash requirements, for a given observation period, is monitored taking into account the average amount
of the deposits with Bank of Portugal over said period. The balance of the account with Bank of Portugal as at 31 December 2021
was included in the observation period running from 22 December 2021 to 08 February 2022.
Checks to be collected on credit institutions at home and abroad were sent for collection within the first business days following the
reference dates.
NOTE 21 – FINANCIAL ASSETS AND LIABILITIES
HELD FOR TRADING
As at 31 December 2021, and 31 December 2020, this caption is analysed as follows:
NOTE 21 – FINANCIAL ASSETS AND LIABILITIES HELD FOR TRADING
As at 31 December 2021, and 31 December 2020, this caption is analysed as follows:
Financial assets held for trading
Securities
Securities held for trading
Bonds and other fixed income securities
Issued by government and public entities
Derivatives
Derivatives held for trading with positive fair value
Financial liabilities held for trading
Derivatives
Derivatives held for trading with negative fair value
(in thousands of Euros)
31.12.2021
31.12.2020
114 465
114 465
263 244
263 244
377 709
267 016
267 016
388 311
388 311
655 327
305 512
305 512
554 343
554 343
Securities held for trading
In accordance with the accounting policy described in Note 6.10.5, securities held for trading are those
acquired to be traded in the short-term regardless of their maturity.
In accordance with the accounting policy described in Note 6.10.5, securities held for trading are those acquired to be traded in the
short-term regardless of their maturity.
Securities held for trading
As at 31 December 2021, and 2020, the schedule of securities held for trading by maturity is as follows:
As at 31 December 2021, and 2020, the schedule of securities held for trading by maturity is as follows:
From one to five years
More than five years
31.12.2021
(in thousands of Euros)
42
31.12.2020
-
114 465
114 465
3 734
263 282
267 016
A breakdown of the securities held for trading, by fair value hierarchy, is presented in Note 38.
A breakdown of the securities held for trading, by fair value hierarchy, is presented in Note 38.
Derivatives
Derivatives
As at 31 December 2021 and 31 December 2020, this caption is analysed as follows:
As at 31 December 2021 and 31 December 2020, this caption is analysed as follows:
31.12.2021
(in thousands of Euros)
31.12.2020
Notional
Fair value
Assets
Liabilities
Notional
Fair value
Assets
Liabilities
23 668
7 893
356
Trading derivatives
Exchange rate contracts
Forward
- acquisition
- sales
Currency Swaps
- acquisition
- sales
- acquisition
- sales
Currency Options
- acquisition
- sales
Currency Interest Rate Swaps
Interest rate contracts
Interest Rate Swaps
- acquisition
- sales
- acquisition
- sales
Interest Rate Caps & Floors
Stock / index contracts
Equity / Index Swaps
Equity / Index Options
- acquisition
- sales
- acquisition
- sales
Default risk contracts
Credit Default Swaps
- acquisition
- sales
Commodities contracts
Commodities Swaps
- acquisition
- sales
2 702
6 872
541 169
545 093
497 717
499 124
21 083
21 083
304 349
304 349
5 645 388
5 645 388
86 436
166 554
-
-
-
-
525 436
525 436
8 180
8 180
2 359
2 359
-
-
-
-
-
-
29 633
29 633
696
696
574
574
578 826
562 420
1 010 248
1 010 906
21 390
21 390
168 095
167 870
6 758 221
6 759 223
89 767
165 221
30 467
30 467
662 425
684 421
2 399
2 399
-
-
680
1 949
1 499
5 488
20 024
20 103
21 363
21 363
5 766
5 766
10 743
10 706
29 172
34 690
57 273
45 450
224 327
265 070
318 578
499 616
869
2 819
1 084
3 961
225 196
267 889
319 662
503 577
2 337
2 204
9 039
11 376
3 096
5 300
-
-
-
-
16
16
-
-
43
a) Derivatives traded on organized markets, the market value of which is settled daily against the margin account (see Note 31)
Fair value option derivatives include instruments designed to manage the risk associated with certain financial assets and liabilities
designated at fair value through profit or loss, in accordance with the accounting policy described in Notes 6.10.6 and 6.10.7, and
which the Bank has not designated for hedge accounting.
263 244
305 512
388 311
554 343
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Securities held for trading
short-term regardless of their maturity.
In accordance with the accounting policy described in Note 6.10.5, securities held for trading are those acquired to be traded in the
As at 31 December 2021, and 2020, the schedule of securities held for trading by maturity is as follows:
From one to five years
More than five years
A breakdown of the securities held for trading, by fair value hierarchy, is presented in Note 38.
Derivatives
As at 31 December 2021 and 31 December 2020, this caption is analysed as follows:
(in thousands of Euros)
31.12.2021
31.12.2020
-
114 465
114 465
3 734
263 282
267 016
Trading derivatives
Exchange rate contracts
Forward
- acquisition
- sales
Currency Swaps
- acquisition
- sales
Currency Interest Rate Swaps
- acquisition
- sales
Currency Options
- acquisition
- sales
Interest rate contracts
Interest Rate Swaps
- acquisition
- sales
Interest Rate Caps & Floors
- acquisition
- sales
Stock / index contracts
Equity / Index Swaps
- acquisition
- sales
Equity / Index Options
- acquisition
- sales
Default risk contracts
Credit Default Swaps
- acquisition
- sales
Commodities contracts
Commodities Swaps
- acquisition
- sales
31.12.2021
(in thousands of Euros)
31.12.2020
Notional
Fair value
Assets
Liabilities
Notional
Fair value
Assets
Liabilities
541 169
545 093
497 717
499 124
21 083
21 083
304 349
304 349
5 645 388
5 645 388
86 436
166 554
-
-
525 436
525 436
-
-
29 633
29 633
2 702
6 872
680
1 949
20 024
20 103
5 766
5 766
578 826
562 420
1 010 248
1 010 906
21 390
21 390
168 095
167 870
23 668
7 893
1 499
5 488
21 363
21 363
10 743
10 706
29 172
34 690
57 273
45 450
224 327
265 070
869
2 819
6 758 221
6 759 223
89 767
165 221
318 578
499 616
1 084
3 961
225 196
267 889
319 662
503 577
-
-
8 180
8 180
2 359
2 359
-
-
-
-
696
696
574
574
30 467
30 467
662 425
684 421
2 399
2 399
-
-
2 337
2 204
9 039
11 376
3 096
5 300
-
-
-
-
16
16
-
-
263 244
305 512
388 311
554 343
a) Derivatives traded on organized markets, the market value of which is settled daily against the margin account (see Note 31)
Fair value option derivatives include instruments designed to manage the risk associated with certain financial assets and liabilities
designated at fair value through profit or loss, in accordance with the accounting policy described in Notes 6.10.6 and 6.10.7, and
which the Bank has not designated for hedge accounting.
Fair value option derivatives include instruments designed to manage the risk associated with certain
financial assets and liabilities designated at fair value through profit or loss, in accordance with the
accounting policy described in Notes 6.10.6 and 6.10.7, and which the Bank has not designated for
hedge accounting.
In the financial year of 2021, the Bank recognized a loss of Euro -454 thousand related to the CVA of
derivative instruments (31 December 2020: loss of Euro 289 thousand). The way of determining the
CVA is explained in Note 38.
As at 31 December 2021 and 2020, the analysis of the derivatives held for trading by maturity period
is as follows:
43
357
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
In the financial year of 2021, the Bank recognized a loss of Euro -454 thousand related to the CVA of derivative instruments (31
December 2020: loss of Euro 289 thousand). The way of determining the CVA is explained in Note 38.
In the financial year of 2021, the Bank recognized a loss of Euro -454 thousand related to the CVA of derivative instruments (31
As at 31 December 2021 and 2020, the analysis of the derivatives held for trading by maturity period is as follows:
December 2020: loss of Euro 289 thousand). The way of determining the CVA is explained in Note 38.
As at 31 December 2021 and 2020, the analysis of the derivatives held for trading by maturity period is as follows:
(in thousands of Euros)
Derivatives held for negotiation
Derivatives held for negotiation
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
Up to 3 months
More than 5 years
From 3 months to 1 year
From 1 to 5 years
More than 5 years
31.12.2021
Notional
Assets
Liabilities
31.12.2021
Fair Value (net)
Assets
31.12.2020
Liabilities
31.12.2020
Notional
Notional
Fair Value (net)
(in thousands of Euros)
Notional
Assets
1 136 849
654 256
1 634 973
1 136 849
4 225 133
654 256
7 651 211
1 634 973
4 225 133
7 651 211
Liabilities
1 142 438
653 806
1 641 635
1 142 438
4 298 781
653 806
7 736 660
1 641 635
4 298 781
7 736 660
Fair Value (net)
( 6 115)
5 459
2 792
( 6 115)
( 44 404)
5 459
( 42 268)
2 792
( 44 404)
( 42 268)
Assets
1 596 056
821 366
2 329 447
1 596 056
4 574 969
821 366
9 321 838
2 329 447
4 574 969
9 321 838
Liabilities
1 596 370
805 003
2 347 986
1 596 370
4 654 958
805 003
9 404 317
2 347 986
4 654 958
9 404 317
Fair Value (net)
32
8 725
( 23 383)
32
( 151 406)
8 725
( 166 032)
( 23 383)
( 151 406)
( 166 032)
NOTE 22 – FINANCIAL ASSETS MANDATORILY AT FAIR VALUE THROUGH PROFIT OR LOSS, DESIGNATED AT FAIR
VALUE THROUGH PROFIT OR LOSS, AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME AND AT AMORTISED
NOTE 22 – FINANCIAL ASSETS MANDATORILY AT FAIR VALUE THROUGH PROFIT OR LOSS, DESIGNATED
COST
NOTE 22 – FINANCIAL ASSETS MANDATORILY AT FAIR VALUE THROUGH PROFIT OR LOSS, DESIGNATED AT FAIR
AT FAIR VALUE THROUGH PROFIT OR LOSS, AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
VALUE THROUGH PROFIT OR LOSS, AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME AND AT AMORTISED
As at 31 December 2021, and 31 December 2020, this caption is analysed as follows:
COST
INCOME AND AT AMORTISED COST
As at 31 December 2021, and 31 December 2020, this caption is analysed as follows:
As at 31 December 2021, and 31 December 2020, this caption is analysed as follows:
(in thousands of Euros)
31.12.2021
Mandatorily at fair value
through profit and loss
Fair value through other
comprehensive income
Amortised cost
31.12.2021
Fair value changes
*
(in thousands of Euros)
Total
Securities
Loans and advances to banks
Loans and advances to customers
Securities
Loans and advances to banks
Mandatorily at fair value
through profit and loss
2 250 308
-
Fair value through other
7 133 508
comprehensive income
-
-
2 250 308
2 250 308
-
Amortised cost
2 893 829
186 089
21 897 382
2 893 829
24 977 300
186 089
21 897 382
Fair value changes
( 3 136)
*
-
31 923
( 3 136)
28 787
-
31 923
12 274 509
Total
186 089
21 929 305
12 274 509
34 389 903
186 089
21 929 305
-
7 133 508
7 133 508
-
-
* Fair value changes of the elements covered by the interest rate hedge portfolio (see Note 23)
Loans and advances to customers
-
* Fair value changes of the elements covered by the interest rate hedge portfolio (see Note 23)
31.12.2020
2 250 308
7 133 508
24 977 300
28 787
(in thousands of Euros)
34 389 903
Mandatorily at fair value
through profit and loss
Fair value through other
comprehensive income
Amortised cost
31.12.2020
Fair value changes
*
(in thousands of Euros)
Total
Securities
Loans and advances to banks
Loans and advances to customers
Securities
Loans and advances to banks
Mandatorily at fair value
through profit and loss
2 445 605
-
Fair value through other
7 813 584
comprehensive income
-
-
2 445 605
2 445 605
-
Amortised cost
2 873 753
245 472
21 685 258
2 873 753
24 804 483
245 472
21 685 258
Fair value changes
1 129
*
-
59 847
1 129
60 976
-
59 847
13 134 071
Total
245 472
21 745 105
13 134 071
35 124 648
245 472
21 745 105
-
7 813 584
7 813 584
-
-
* Fair value changes of the elements covered by the interest rate hedge portfolio (see Note 23)
Loans and advances to customers
-
* Fair value changes of the elements covered by the interest rate hedge portfolio (see Note 23)
2 445 605
7 813 584
24 804 483
60 976
35 124 648
Securities
As of 31 December 2021, and 31 December 2020, the detail of securities portfolio is as follows:
358
44
44
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Securities
As of 31 December 2021, and 31 December 2020, the detail of securities portfolio is as follows:
Securities mandatorily at fair value through profit or loss
Bonds and other fixed income securities
From other issuers
Shares
Other securities with variable income
Securities at fair value through other comprehensive income
Bonds and other fixed income securities
From public issuers
From other issuers
Shares
Securities at amortised cost
Bonds and other fixed income securities
From public issuers
From other issuers
Impairment
Value adjustments for hedging operations for interest rate risk (See Note 23)
(in thousands of Euros)
31.12.2021
31.12.2020
559 227
425 363
647 082
403 752
1 265 718
1 394 771
2 250 308
2 445 605
5 685 067
1 398 899
49 542
6 406 465
1 352 759
54 360
7 133 508
7 813 584
371 273
2 770 328
415 192
2 661 021
( 247 772)
( 202 460)
2 893 829
2 873 753
( 3 136)
1 129
12 274 509
13 134 071
The securities mandatorily accounted at fair value through profit or loss include the participation units held by the Bank in Restructuring
Funds, which are accounted for in accordance with the accounting policy described in Note 6.10.4, based on the net book value
disclosed by the Management Companies, which may be adjusted according to information, analyzes or independent evaluations
deemed necessary to determine its fair value, in response to guidelines from the European Central Bank.
The securities mandatorily accounted at fair value through profit or loss include the participation units
held by the Bank in Restructuring Funds, which are accounted for in accordance with the accounting
policy described in Note 6.10.4, based on the net book value disclosed by the Management Companies,
which may be adjusted according to information, analyzes or independent evaluations deemed
necessary to determine its fair value, in response to guidelines from the European Central Bank.
At the end of 2020, novobanco completed the independent assessment of the restructuring funds. These funds are “level 3” assets
in accordance with the fair value hierarchy of IFRS 13 (quotations provided by third parties whose parameters used are not observable
in the market), and novobanco requested an independent evaluation from an international consulting company in articulation with
real estate consultancy companies. This work resulted in a market value of Euro 498.8 million for the total investment held in these
assets, which led to the recording of a loss of Euro -300.2 million in the year 2020 recorded under the heading of gains or losses with
financial assets mandatorily accounted for at fair value through profit or loss (see Note 11). This assessment included the
establishment of assumptions for the valuation of assets included in the funds, a discount at the level of the fund based on parameters
equivalent to quoted funds and an appreciation of the potential evolution of the fund (see Note 38).
At the end of 2020, novobanco completed the independent assessment of the restructuring funds.
These funds are “level 3” assets in accordance with the fair value hierarchy of IFRS 13 (quotations
provided by third parties whose parameters used are not observable in the market), and novobanco
requested an independent evaluation from an international consulting company in articulation with
real estate consultancy companies. This work resulted in a market value of Euro 498.8 million for the
total investment held in these assets, which led to the recording of a loss of Euro -300.2 million in the
year 2020 recorded under the heading of gains or losses with financial assets mandatorily accounted
for at fair value through profit or loss (see Note 11). This assessment included the establishment of
assumptions for the valuation of assets included in the funds, a discount at the level of the fund based
on parameters equivalent to quoted funds and an appreciation of the potential evolution of the fund
(see Note 38).
As at 31 December 2021 and 2020, the detail of the fair value securities through other comprehensive
income is as follows:
As at 31 December 2021 and 2020, the detail of the fair value securities through other comprehensive income is as follows:
Cost (1)
Fair value reserve
Positive
Negative
(in thousands of Euros)
Balance
sheet value
Impairment
reserves
Bonds and other fixed income securities
From public issuers
Residents
Non residents
From other issuers
Residents
Non residents
Shares
Residents
Non residents
Other securities with variable income
Residents
5 484 078
2 406 121
3 077 957
1 374 554
29 609
1 344 945
398 186
328 230
69 956
3
3
204 864
86 400
118 464
30 008
63
29 945
11 810
10 567
1 243
-
-
( 3 875)
-
( 3 875)
( 5 663)
( 2 335)
( 3 328)
( 360 454)
( 298 226)
( 62 228)
( 3)
( 3)
5 685 067
2 492 521
3 192 546
1 398 899
27 337
1 371 562
49 542
40 571
8 971
-
-
359
( 2 995)
( 1 466)
( 1 529)
( 673)
( 3)
( 670)
-
-
-
-
-
45
Balance as at 31 December 2021
7 256 821
246 682
( 369 995)
7 133 508
( 3 668)
(1) Aquisition cost referring to shares and other equity instrum ents and am ortized cost for debt securities.
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Securities
As of 31 December 2021, and 31 December 2020, the detail of securities portfolio is as follows:
Securities mandatorily at fair value through profit or loss
Bonds and other fixed income securities
From other issuers
Shares
Other securities with variable income
Securities at fair value through other comprehensive income
Bonds and other fixed income securities
From public issuers
From other issuers
Shares
Securities at amortised cost
Bonds and other fixed income securities
From public issuers
From other issuers
Impairment
(in thousands of Euros)
31.12.2021
31.12.2020
559 227
425 363
647 082
403 752
1 265 718
1 394 771
2 250 308
2 445 605
5 685 067
1 398 899
49 542
6 406 465
1 352 759
54 360
7 133 508
7 813 584
371 273
2 770 328
415 192
2 661 021
( 247 772)
( 202 460)
2 893 829
2 873 753
( 3 136)
1 129
12 274 509
13 134 071
Value adjustments for hedging operations for interest rate risk (See Note 23)
The securities mandatorily accounted at fair value through profit or loss include the participation units held by the Bank in Restructuring
Funds, which are accounted for in accordance with the accounting policy described in Note 6.10.4, based on the net book value
disclosed by the Management Companies, which may be adjusted according to information, analyzes or independent evaluations
deemed necessary to determine its fair value, in response to guidelines from the European Central Bank.
At the end of 2020, novobanco completed the independent assessment of the restructuring funds. These funds are “level 3” assets
in accordance with the fair value hierarchy of IFRS 13 (quotations provided by third parties whose parameters used are not observable
in the market), and novobanco requested an independent evaluation from an international consulting company in articulation with
real estate consultancy companies. This work resulted in a market value of Euro 498.8 million for the total investment held in these
assets, which led to the recording of a loss of Euro -300.2 million in the year 2020 recorded under the heading of gains or losses with
financial assets mandatorily accounted for at fair value through profit or loss (see Note 11). This assessment included the
establishment of assumptions for the valuation of assets included in the funds, a discount at the level of the fund based on parameters
equivalent to quoted funds and an appreciation of the potential evolution of the fund (see Note 38).
As at 31 December 2021 and 2020, the detail of the fair value securities through other comprehensive income is as follows:
Bonds and other fixed income securities
From public issuers
Residents
Non residents
From other issuers
Residents
Non residents
Shares
Residents
Non residents
Other securities with variable income
Residents
Cost (1)
Fair value reserve
Positive
Negative
(in thousands of Euros)
Balance
sheet value
Impairment
reserves
5 484 078
2 406 121
3 077 957
1 374 554
29 609
1 344 945
398 186
328 230
69 956
3
3
204 864
86 400
118 464
30 008
63
29 945
11 810
10 567
1 243
-
-
( 3 875)
-
( 3 875)
( 5 663)
( 2 335)
( 3 328)
( 360 454)
( 298 226)
( 62 228)
( 3)
( 3)
5 685 067
2 492 521
3 192 546
1 398 899
27 337
1 371 562
49 542
40 571
8 971
-
-
( 2 995)
( 1 466)
( 1 529)
( 673)
( 3)
( 670)
-
-
-
-
-
Balance as at 31 December 2021
7 256 821
246 682
( 369 995)
7 133 508
( 3 668)
(1) Aquisition cost referring to shares and other equity instrum ents and am ortized cost for debt securities.
Cost (1)
Fair value reserve
Positive
Negative
(in thousands of Euros)
Balance
sheet value
Impairment
45
reserves
Bonds and other fixed income securities
From public issuers
Residents
Non residents
From other issuers
Residents
Non residents
Shares
Residents
Non residents
Other securities with variable income
Residents
Balance as at 31 December 2020
(1) Aquisition cost referring to shares and other equity instrum ents and am ortized cost for debt securities.
6 050 592
2 571 260
3 479 332
1 286 344
29 605
1 256 739
407 319
331 888
75 431
2
2
356 115
125 602
230 513
68 749
107
68 642
12 548
11 330
1 218
-
-
( 242)
-
( 242)
( 2 334)
( 2 334)
-
( 365 507)
( 296 014)
( 69 493)
( 2)
( 2)
6 406 465
2 696 862
3 709 603
1 352 759
27 378
1 325 381
54 360
47 204
7 156
-
-
( 3 095)
( 1 405)
( 1 690)
( 565)
( 3)
( 562)
-
-
-
-
-
7 744 257
437 412
( 368 085)
7 813 584
( 3 660)
During the year 2021, the Bank sold Euro 934,4 million of financial instruments classified at fair value through other comprehensive
income (31 December 2020: Euro 1 295,0 million), with a gain of Euro 12,3 million (31 December 2020: gain of Euro 80,2 million),
recorded in the income statement, from the sale of debt instruments and a loss of Euro 9,5 million that were transferred from
revaluation reserves to sales-related reserves (31 December 2020: loss of Euro 16.4 million).
The movements in the impairment reserves in fair value securities through other comprehensive income
are presented as follows:
During the year 2021, the Bank sold Euro 934,4 million of financial instruments classified at fair value
through other comprehensive income (31 December 2020: Euro 1 295,0 million), with a gain of Euro
12,3 million (31 December 2020: gain of Euro 80,2 million), recorded in the income statement, from the
sale of debt instruments and a loss of Euro 9,5 million that were transferred from revaluation reserves
to sales-related reserves (31 December 2020: loss of Euro 16.4 million).
The movements in the impairment reserves in fair value securities through other comprehensive income are presented as follows:
(in thousands of Euros)
Changes in impairment losses on amortized cost securities are as follows:
Balance as at 31 December 2019
Increases due to changes in credit risk
Decreases due to changes in credit risk
Utilization during the period
Other movements
Balance as at 31 December 2020
Increases due to changes in credit risk
Decreases due to changes in credit risk
Utilization during the period
Other movements
Balance as at 31 December 2021
Balance as at 31 December 2019
Increases due to changes in credit risk
Decreases due to changes in credit risk
Utilization during the period
Other movements
Balance as at 31 December 2020
Increases due to changes in credit risk
Decreases due to changes in credit risk
Utilization during the period
Other movements
Balance as at 31 December 2021
360
Impairment movement of securities at fair value
through other comprehensive income
Stage 1
Stage 2
Stage 3
Total
5 505
3 480
( 5 022)
( 232)
( 64)
3 667
1 252
( 895)
( 384)
28
3 668
-
38
-
( 44)
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5 505
3 518
( 5 022)
( 276)
( 58)
3 667
1 252
( 895)
( 384)
28
3 668
Impairment movement of securities at amortised cost
Stage 1
Stage 2
Stage 3
Total
(in thousands of Euros)
3 758
53 974
102 422
160 154
11 256
( 10 094)
716 961
( 682 995)
( 36)
296
( 2)
( 318)
10 533
( 3 294)
-
( 1)
738 750
( 696 383)
( 38)
( 23)
5 180
87 620
109 660
202 460
9 264
1 058 247
( 8 074)
( 1 107 544)
( 12)
( 112)
( 1)
( 39)
148 112
( 53 046)
( 1 640)
157
1 215 623
( 1 168 664)
( 1 653)
6
6 246
38 283
203 243
247 772
In accordance with the accounting policy mentioned on Note 6.16, the Bank regularly evaluate if there is any objective evidence of
impairment in its securities portfolio at a fair value through other comprehensive income based on the judgement criteria mentioned
on Note 7.1.
46
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Bonds and other fixed income securities
Bonds and other fixed income securities
From public issuers
From public issuers
Residents
Residents
Non residents
From other issuers
Non residents
From other issuers
Residents
Residents
Non residents
Non residents
Shares
Shares
Residents
Residents
Non residents
Non residents
Other securities with variable income
Other securities with variable income
Residents
Residents
Balance as at 31 December 2020
Balance as at 31 December 2020
(1) Aquisition cost referring to shares and other equity instrum ents and am ortized cost for debt securities.
7 744 257
(1) Aquisition cost referring to shares and other equity instrum ents and am ortized cost for debt securities.
Cost (1)
Cost (1)
Fair value reserve
Fair value reserve
Positive
Positive
Negative
Negative
(in thousands of Euros)
(in thousands of Euros)
Balance
sheet value
Balance
sheet value
Impairment
Impairment
reserves
reserves
6 050 592
6 050 592
2 571 260
2 571 260
3 479 332
3 479 332
1 286 344
1 286 344
29 605
1 256 739
29 605
1 256 739
407 319
407 319
331 888
331 888
75 431
75 431
2
2
2
2
7 744 257
356 115
356 115
125 602
125 602
230 513
230 513
68 749
68 749
107
68 642
107
68 642
12 548
12 548
11 330
11 330
1 218
1 218
-
-
-
-
( 242)
( 242)
-
( 242)
-
( 242)
( 2 334)
( 2 334)
( 2 334)
( 2 334)
-
-
( 365 507)
( 365 507)
( 296 014)
( 296 014)
( 69 493)
( 69 493)
( 2)
( 2)
( 2)
( 2)
6 406 465
6 406 465
2 696 862
2 696 862
3 709 603
3 709 603
1 352 759
1 352 759
27 378
1 325 381
27 378
1 325 381
54 360
54 360
47 204
47 204
7 156
7 156
-
-
-
-
( 3 095)
( 3 095)
( 1 405)
( 1 405)
( 1 690)
( 1 690)
( 565)
( 565)
( 3)
( 562)
( 3)
( 562)
-
-
-
-
-
-
-
-
-
-
437 412
437 412
( 368 085)
( 368 085)
7 813 584
7 813 584
( 3 660)
( 3 660)
During the year 2021, the Bank sold Euro 934,4 million of financial instruments classified at fair value through other comprehensive
During the year 2021, the Bank sold Euro 934,4 million of financial instruments classified at fair value through other comprehensive
income (31 December 2020: Euro 1 295,0 million), with a gain of Euro 12,3 million (31 December 2020: gain of Euro 80,2 million),
income (31 December 2020: Euro 1 295,0 million), with a gain of Euro 12,3 million (31 December 2020: gain of Euro 80,2 million),
recorded in the income statement, from the sale of debt instruments and a loss of Euro 9,5 million that were transferred from
recorded in the income statement, from the sale of debt instruments and a loss of Euro 9,5 million that were transferred from
revaluation reserves to sales-related reserves (31 December 2020: loss of Euro 16.4 million).
revaluation reserves to sales-related reserves (31 December 2020: loss of Euro 16.4 million).
The movements in the impairment reserves in fair value securities through other comprehensive income are presented as follows:
The movements in the impairment reserves in fair value securities through other comprehensive income are presented as follows:
(in thousands of Euros)
(in thousands of Euros)
Impairment movement of securities at fair value
Impairment movement of securities at fair value
through other comprehensive income
through other comprehensive income
Stage 1
Stage 1
Stage 2
Stage 2
Stage 3
Stage 3
Balance as at 31 December 2019
Balance as at 31 December 2019
Increases due to changes in credit risk
Increases due to changes in credit risk
Decreases due to changes in credit risk
Decreases due to changes in credit risk
Utilization during the period
Utilization during the period
Other movements
Other movements
Balance as at 31 December 2020
Balance as at 31 December 2020
Increases due to changes in credit risk
Increases due to changes in credit risk
Decreases due to changes in credit risk
Decreases due to changes in credit risk
Utilization during the period
Utilization during the period
Other movements
Other movements
Balance as at 31 December 2021
Balance as at 31 December 2021
5 505
5 505
3 480
3 480
( 5 022)
( 5 022)
( 232)
( 232)
( 64)
( 64)
3 667
3 667
1 252
1 252
( 895)
( 895)
( 384)
( 384)
28
28
3 668
3 668
-
-
38
38
-
-
( 44)
( 44)
6
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
Total
5 505
5 505
3 518
3 518
( 5 022)
( 5 022)
( 276)
( 276)
( 58)
( 58)
3 667
3 667
1 252
1 252
( 895)
( 895)
( 384)
( 384)
28
28
3 668
3 668
Balance as at 31 December 2019
Balance as at 31 December 2019
Increases due to changes in credit risk
Increases due to changes in credit risk
Decreases due to changes in credit risk
Decreases due to changes in credit risk
Utilization during the period
Utilization during the period
Other movements
Other movements
Balance as at 31 December 2020
Balance as at 31 December 2020
Increases due to changes in credit risk
Increases due to changes in credit risk
Decreases due to changes in credit risk
Decreases due to changes in credit risk
Utilization during the period
Utilization during the period
Other movements
Other movements
(in thousands of Euros)
(in thousands of Euros)
Stage 1
Stage 1
Stage 2
Stage 2
Stage 3
Stage 3
Impairment movement of securities at amortised cost
Impairment movement of securities at amortised cost
Total
Total
160 154
160 154
738 750
738 750
( 696 383)
( 696 383)
( 38)
( 38)
( 23)
( 23)
202 460
202 460
1 215 623
1 215 623
( 1 168 664)
( 1 168 664)
( 1 653)
( 1 653)
6
6
247 772
247 772
53 974
53 974
716 961
716 961
( 682 995)
( 682 995)
( 2)
( 2)
( 318)
( 318)
87 620
87 620
1 058 247
1 058 247
( 1 107 544)
( 1 107 544)
( 1)
( 1)
( 39)
( 39)
38 283
38 283
102 422
102 422
10 533
10 533
( 3 294)
( 3 294)
-
-
( 1)
( 1)
109 660
109 660
148 112
148 112
( 53 046)
( 53 046)
( 1 640)
( 1 640)
157
157
203 243
203 243
3 758
3 758
11 256
11 256
( 10 094)
( 10 094)
( 36)
( 36)
296
296
5 180
5 180
9 264
9 264
( 8 074)
( 8 074)
( 12)
( 12)
( 112)
( 112)
6 246
6 246
Changes in impairment losses on amortized cost securities are as follows:
Changes in impairment losses on amortized cost securities are as follows:
Changes in impairment losses on amortized cost securities are as follows:
Balance as at 31 December 2021
Balance as at 31 December 2021
In accordance with the accounting policy mentioned on Note 6.16, the Bank regularly evaluate if there is any objective evidence of
In accordance with the accounting policy mentioned on Note 6.16, the Bank regularly evaluate if there is any objective evidence of
impairment in its securities portfolio at a fair value through other comprehensive income based on the judgement criteria mentioned
impairment in its securities portfolio at a fair value through other comprehensive income based on the judgement criteria mentioned
on Note 7.1.
on Note 7.1.
In accordance with the accounting policy mentioned on Note 6.16, the Bank regularly evaluate if
there is any objective evidence of impairment in its securities portfolio at a fair value through other
comprehensive income based on the judgement criteria mentioned on Note 7.1.
The dotation for impairment for securities during 2020 financial year include Euro 29,0 million, reflecting
the update of information in IFRS 9 models, anticipating losses related to the Covid-19 pandemic.
As at 31 December 2021, and 2020, the securities portfolio, by residual maturity period, is as follows:
46
46
361
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The dotation for impairment for securities during 2020 financial year include Euro 29,0 million, reflecting the update of information in
IFRS 9 models, anticipating losses related to the Covid-19 pandemic.
The dotation for impairment for securities during 2020 financial year include Euro 29,0 million, reflecting the update of information in
IFRS 9 models, anticipating losses related to the Covid-19 pandemic.
As at 31 December 2021, and 2020, the securities portfolio, by residual maturity period, is as follows:
As at 31 December 2021, and 2020, the securities portfolio, by residual maturity period, is as follows:
(in thousands of Euros)
31.12.2021
(in thousands of Euros)
31.12.2020
Securities mandatorily at fair value through profit or loss
31.12.2021
31.12.2020
Securities mandatorily at fair value through profit or loss
Up to 3 months
From 3 months to 1 year
Up to 3 months
From 1 to 5 years
From 3 months to 1 year
More than 5 years
From 1 to 5 years
Undetermined (Overdue Loans)
More than 5 years
Undetermined (Overdue Loans)
Securities mandatority at fair value through other comprehensive income
Securities mandatority at fair value through other comprehensive income
Up to 3 months
From 3 months to 1 year
Up to 3 months
From 1 to 5 years
From 3 months to 1 year
More than 5 years
From 1 to 5 years
Undetermined (Overdue Loans)
More than 5 years
Undetermined (Overdue Loans)
Securities at amortized cost (*)
Securities at amortized cost (*)
Up to 3 months
From 3 months to 1 year
Up to 3 months
From 1 to 5 years
From 3 months to 1 year
More than 5 years
From 1 to 5 years
More than 5 years
(*) Gross Value before impairment
41 741
-
41 741
2 443
-
515 043
2 443
1 691 081
515 043
2 250 308
1 691 081
2 250 308
451 043
988 943
451 043
3 021 902
988 943
2 622 078
3 021 902
49 542
2 622 078
7 133 508
49 542
7 133 508
709 932
139 547
709 932
483 503
139 547
1 808 619
483 503
3 141 601
1 808 619
12 525 417
3 141 601
75 553
32 670
75 553
39 966
32 670
498 893
39 966
1 798 523
498 893
2 445 605
1 798 523
2 445 605
216 825
760 409
216 825
3 904 755
760 409
2 877 235
3 904 755
54 360
2 877 235
7 813 584
54 360
7 813 584
754 292
113 105
754 292
267 980
113 105
1 940 836
267 980
3 076 213
1 940 836
13 335 402
3 076 213
12 525 417
13 335 402
The detail of the securities portfolio by fair value hierarchy is presented in Note 38.
The detail of the securities portfolio by fair value hierarchy is presented in Note 38.
The portfolio securities pledged by the bank are analysed in Note 35.
The portfolio securities pledged by the bank are analysed in Note 35.
The portfolio securities pledged by the bank are analysed in Note 35.
(*) Gross Value before impairment
The detail of the securities portfolio by fair value hierarchy is presented in Note 38.
Loans and advances to Banks
Loans and advances to Banks
As at 31 December 2021 and 31 December 2020, the detail of Loans and advances to banks is as follows:
Loans and advances to Banks
As at 31 December 2021 and 31 December 2020, the detail of Loans and advances to banks is as follows:
As at 31 December 2021 and 31 December 2020, the detail of Loans and advances to banks is as follows:
(in thousands of Euros)
31.12.2021
(in thousands of Euros)
31.12.2020
Loans and advances to banks in Portugal
Loans and advances to banks in Portugal
Very short-term placements
Deposits
Very short-term placements
Loans
Deposits
Other loans and advances
Loans
Other loans and advances
Loans and advances to banks abroad
Loans and advances to banks abroad
Deposits
Other loans and advances
Deposits
Other loans and advances
Outstanding applications
Outstanding applications
Impairment losses
Impairment losses
Investments in credit institutions are all recorded in the amortised cost portfolio.
Investments in credit institutions are all recorded in the amortised cost portfolio.
31.12.2021
-
136 408
-
44 770
136 408
3
44 770
181 181
3
181 181
6 089
2
6 089
6 091
2
6 091
-
187 272
-
187 272
( 1 183)
31.12.2020
4 075
136 440
4 075
30 429
136 440
4
30 429
170 948
4
170 948
10 532
279 419
10 532
289 951
279 419
289 951
34 726
495 625
34 726
495 625
( 250 153)
186 089
( 1 183)
245 472
( 250 153)
186 089
245 472
362
47
47
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Investments in credit institutions are all recorded in the amortised cost portfolio.
As at 31 December 2021 and 2020, the analysis of loans and advances to banks, by residual maturity is as follows:
As at 31 December 2021 and 2020, the analysis of loans and advances to banks, by residual maturity
is as follows:
As at 31 December 2021 and 2020, the analysis of loans and advances to banks, by residual maturity is as follows:
(in thousands of Euros)
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
Up to 3 months
Undetermined (Overdue Loans)
From 3 months to 1 year
From 1 to 5 years
More than 5 years
Undetermined (Overdue Loans)
Changes in impairment losses on loans and advances to banks are presented as follows:
31.12.2021
35 213
107 809
38 282
5 968
35 213
-
107 809
38 282
187 272
5 968
-
(in thousands of Euros)
31.12.2020
51 484
100 259
303 188
5 968
51 484
34 726
100 259
303 188
495 625
5 968
34 726
31.12.2021
31.12.2020
Changes in impairment losses on loans and advances to banks are presented as follows:
Changes in impairment losses on loans and advances to banks are presented as follows:
187 272
495 625
(in thousands of Euros)
Loans and advances to banks
Stage 1
Stage 2
Stage 3
(in thousands of Euros)
Total
Balance as at 31 December 2019
367
Loans and advances to banks
76 341
426
77 134
Balance as at 31 December 2019
Balance as at 31 December 2020
Increases due to changes in credit risk
Decreases due to changes in credit risk
Other movements
Increases due to changes in credit risk
Decreases due to changes in credit risk
Increases due to changes in credit risk
Other movements
Decreases due to changes in credit risk
Uses
Other movements
Increases due to changes in credit risk
Decreases due to changes in credit risk
Uses
Other movements
Balance as at 31 December 2021
Balance as at 31 December 2020
Stage 1
556
( 477)
367
( 1)
556
445
( 477)
414
( 1)
( 544)
445
( 101 282)
101 251
414
( 544)
284
( 101 282)
101 251
Stage 2
2 462
( 1 965)
76 341
( 76 836)
2 462
2
( 1 965)
541
( 76 836)
( 102)
2
-
33
541
( 102)
474
-
33
Stage 3
317 540
( 128 520)
426
60 260
317 540
249 706
( 128 520)
134 063
60 260
( 132 564)
249 706
( 167 728)
( 83 052)
134 063
( 132 564)
425
( 167 728)
( 83 052)
Total
320 558
( 130 962)
77 134
( 16 577)
320 558
250 153
( 130 962)
135 018
( 16 577)
( 133 210)
250 153
( 269 010)
18 232
135 018
( 133 210)
1 183
( 269 010)
18 232
The increase of impairment for investments in credit institutions verified in 2020 results from the degradation of the credit risk of
Balance as at 31 December 2021
international exposures analyzed on an individual basis, whose partial default situation at the end of 2020, among other signs of
impairment, led to the transfer of the same to stage 3 and the constitution of additional impairments of Euro 189.6 million. During
2021 part of this exposure was settled, with the remaining exposure being restructured and subsequently derecognized, in line with
The increase of impairment for investments in credit institutions verified in 2020 results from the degradation of the credit risk of
the amendment made in May 2021 to the CCA contract, which extinguished novobanco’s rights and risks on this asset.
international exposures analyzed on an individual basis, whose partial default situation at the end of 2020, among other signs of
impairment, led to the transfer of the same to stage 3 and the constitution of additional impairments of Euro 189.6 million. During
2021 part of this exposure was settled, with the remaining exposure being restructured and subsequently derecognized, in line with
the amendment made in May 2021 to the CCA contract, which extinguished novobanco’s rights and risks on this asset.
Loans and advances to customers
As at 31 December 2021 and 31 December 2020, the detail of loans and advances to customers is
presented as follows:
1 183
474
284
425
The increase of impairment for investments in credit institutions verified in 2020 results from the
degradation of the credit risk of international exposures analyzed on an individual basis, whose partial
default situation at the end of 2020, among other signs of impairment, led to the transfer of the same
to stage 3 and the constitution of additional impairments of Euro 189.6 million. During 2021 part of this
exposure was settled, with the remaining exposure being restructured and subsequently derecognized,
in line with the amendment made in May 2021 to the CCA contract, which extinguished novobanco’s
rights and risks on this asset.
363
48
48
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Loans and advances to customers
As at 31 December 2021 and 31 December 2020, the detail of loans and advances to customers is presented as follows:
Domestic loans and advances
Corporate
Current account loans
Loans
Discounted bills
Factoring
Overdrafts
Financial leases
Other loans and advances
Individuals
Residential Mortgage loans
Consumer credit and other loans
Foreign loans and advances
Corporate
Current account loans
Loans
Discounted bills
Factoring
Overdrafts
Other loans and advances
Individuals
Residential Mortgage loans
Consumer credit and other loans
Overdue loans and advances and interests
Under 90 days
Over 90 days
Impairment losses
Fair value adjustaments of interest rate hedges (See Note 23)
Corporate
Loans
Individuals
Residential Mortgage loans
Loans to customers are all recorded in the amortised cost portfolio.
(in thousands of Euros)
31.12.2021
31.12.2020
1 097 525
8 819 590
75 502
593 512
13 453
1 245 885
17 693
7 260 274
1 063 923
1 109 729
8 876 278
80 430
575 682
7 105
1 421 765
20 974
7 368 861
1 007 365
20 187 357
20 468 189
66 348
1 319 819
2
40 519
54
1
1 037 140
180 412
2 644 295
18 931
282 556
301 487
851 791
146 986
4
51 483
8 321
1
949 211
180 022
2 187 819
13 457
602 796
616 253
23 133 139
23 272 261
(1 235 757)
(1 587 003)
21 897 382
21 685 258
4 035
6 774
27 888
31 923
53 073
59 847
21 929 305
21 745 105
Loans to customers are all recorded in the amortised cost portfolio.
As at 31 December 2021, the caption Loans and advances to customers include Euro 6,075.1 million of mortgage loans related to
the issuance of mortgage bonds (31 December 2020: Euro 6,104.8 million) (see Note 30).
As at 31 December 2021, the amount of interest and commissions recorded in the balance sheet relating
to credit operations amounts to Euro 17,773 thousand (31 December 2020: Euro 24,765 thousand).
As at 31 December 2021, the caption Loans and advances to customers include Euro 6,075.1 million of
mortgage loans related to the issuance of mortgage bonds (31 December 2020: Euro 6,104.8 million)
(see Note 30).
As at 31 December 2021, the amount of interest and commissions recorded in the balance sheet relating to credit operations amounts
to Euro 17,773 thousand (31 December 2020: Euro 24,765 thousand).
As at 31 December 2021 and 2020, the analysis of loans and advances to customers, by residual
maturity period, is as follows:
364
49
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
As at 31 December 2021 and 2020, the analysis of loans and advances to customers, by residual maturity period, is as follows:
As at 31 December 2021 and 2020, the analysis of loans and advances to customers, by residual maturity period, is as follows:
As at 31 December 2021 and 2020, the analysis of loans and advances to customers, by residual maturity period, is as follows:
31.12.2021
31.12.2021
31.12.2021
1 139 039
1 139 039
1 217 721
1 217 721
5 771 766
5 771 766
14 735 049
1 139 039
14 735 049
301 487
1 217 721
301 487
23 165 062
5 771 766
23 165 062
14 735 049
301 487
(in thousands of Euros)
(in thousands of Euros)
31.12.2020
31.12.2020
(in thousands of Euros)
31.12.2020
971 494
971 494
1 243 984
1 243 984
5 112 417
5 112 417
15 387 960
971 494
15 387 960
616 253
1 243 984
616 253
23 332 108
5 112 417
23 332 108
15 387 960
616 253
Up to 3 months
Up to 3 months
From 3 months to 1 year
From 3 months to 1 year
From 1 to 5 years
From 1 to 5 years
More than 5 years
Up to 3 months
More than 5 years
Undetermined duration (Overdue)
From 3 months to 1 year
Undetermined duration (Overdue)
From 1 to 5 years
More than 5 years
Undetermined duration (Overdue)
Changes in credit impairment losses are presented as follows:
Changes in credit impairment losses are presented as follows:
Changes in credit impairment losses are presented as follows:
Changes in credit impairment losses are presented as follows:
23 332 108
(in thousands of Euros)
(in thousands of Euros)
Impairment movements of loans and advances to customers
Impairment movements of loans and advances to customers
23 165 062
Stage 1
Total
Total
Stage 1
Stage 1
Balance as at 31 December 2019
(in thousands of Euros)
Balance as at 31 December 2019
1 841 483
Impairment movements of loans and advances to customers
Balance as at 31 December 2019
1 841 483
Financial assets derecognised
( 294 007)
Total
Financial assets derecognised
( 294 007)
Increases due to changes in credit risk
791 619
Increases due to changes in credit risk
791 619
Decreases due to changes in credit risk
( 271 103)
1 841 483
Decreases due to changes in credit risk
( 271 103)
Utilization during the period
( 439 021)
Financial assets derecognised
( 294 007)
Utilization during the period
( 439 021)
Other movements (a)
( 41 968)
Increases due to changes in credit risk
791 619
Other movements (a)
( 41 968)
1 587 003
Balance as at 31 December 2020
( 271 103)
Decreases due to changes in credit risk
Balance as at 31 December 2020
1 587 003
( 439 021)
Utilization during the period
( 244 059)
Financial assets derecognised
Other movements (a)
( 41 968)
Financial assets derecognised
( 244 059)
Increases due to changes in credit risk
289 202
Increases due to changes in credit risk
289 202
Decreases due to changes in credit risk
( 142 096)
1 587 003
Decreases due to changes in credit risk
( 142 096)
( 266 472)
Utilization during the period
( 244 059)
Financial assets derecognised
Utilization during the period
( 266 472)
12 179
Other movements
289 202
Increases due to changes in credit risk
12 179
Other movements
1 235 757
( 142 096)
Decreases due to changes in credit risk
1 235 757
( 266 472)
Utilization during the period
(a) It includes 58 046 thousand euros of impairment of credits of the Spanish Branch transferred to discontinued operations (22 427 thousand euros in stage 1 and 35 619 thousand euros in stage
(a) It includes 58 046 thousand euros of impairment of credits of the Spanish Branch transferred to discontinued operations (22 427 thousand euros in stage 1 and 35 619 thousand euros in stage
3).
12 179
Other movements
3).
53 065
53 065
( 2)
( 2)
38 169
38 169
( 114 202)
53 065
( 114 202)
( 16)
( 2)
( 16)
83 113
38 169
83 113
60 127
( 114 202)
60 127
( 16)
( 1 282)
83 113
( 1 282)
21 760
21 760
( 46 443)
60 127
( 46 443)
-
( 1 282)
-
27 894
21 760
27 894
62 056
( 46 443)
62 056
-
27 894
Stage 3
Stage 3
1 651 446
1 651 446
( 294 005)
Stage 3
( 294 005)
417 014
417 014
( 59 624)
1 651 446
( 59 624)
( 438 892)
( 294 005)
( 438 892)
( 55 507)
417 014
( 55 507)
1 220 432
( 59 624)
1 220 432
( 438 892)
( 239 704)
( 55 507)
( 239 704)
147 370
147 370
( 39 120)
1 220 432
( 39 120)
( 266 278)
( 239 704)
( 266 278)
33 730
147 370
33 730
856 430
( 39 120)
856 430
( 266 278)
33 730
Stage 2
Stage 2
136 972
136 972
-
Stage 2
-
336 436
336 436
( 97 277)
136 972
( 97 277)
( 113)
-
( 113)
( 69 574)
336 436
( 69 574)
306 444
( 97 277)
306 444
( 113)
( 3 073)
( 69 574)
( 3 073)
120 072
120 072
( 56 533)
306 444
( 56 533)
( 194)
( 3 073)
( 194)
( 49 445)
120 072
( 49 445)
317 271
( 56 533)
317 271
( 194)
( 49 445)
Balance as at 31 December 2021
Balance as at 31 December 2021
Balance as at 31 December 2020
The increase of impairment for credit risk during the year 2021 include Euro 71.8 million, reflecting
the updating of the information in the IFRS 9 models, anticipating the losses related to the Covid-19
pandemic (31 December de 2020: Euro 218.8 million).
Balance as at 31 December 2021
The increase of impairment for credit risk during the year 2021 include Euro 71.8 million, reflecting the updating of the information in
The increase of impairment for credit risk during the year 2021 include Euro 71.8 million, reflecting the updating of the information in
(a) It includes 58 046 thousand euros of impairment of credits of the Spanish Branch transferred to discontinued operations (22 427 thousand euros in stage 1 and 35 619 thousand euros in stage
the IFRS 9 models, anticipating the losses related to the Covid-19 pandemic (31 December de 2020: Euro 218.8 million).
3).
the IFRS 9 models, anticipating the losses related to the Covid-19 pandemic (31 December de 2020: Euro 218.8 million).
Credit distribution by type of rate is as follows:
The increase of impairment for credit risk during the year 2021 include Euro 71.8 million, reflecting the updating of the information in
Credit distribution by type of rate is as follows:
(in thousands of Euros)
the IFRS 9 models, anticipating the losses related to the Covid-19 pandemic (31 December de 2020: Euro 218.8 million).
(in thousands of Euros)
1 235 757
856 430
317 271
62 056
Credit distribution by type of rate is as follows:
Credit distribution by type of rate is as follows:
Fixed rate
Fixed rate
Variable rate
Variable rate
Fixed rate
Variable rate
An analysis of finance lease loans, by residual maturity period, is presented as follows:
(in thousands of Euros)
31.12.2021
31.12.2021
31.12.2021
3 965 414
3 965 414
19 199 648
19 199 648
23 165 062
23 165 062
3 965 414
19 199 648
31.12.2020
31.12.2020
31.12.2020
3 883 609
3 883 609
19 448 499
19 448 499
23 332 108
23 332 108
3 883 609
19 448 499
23 165 062
23 332 108
365
50
50
50
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
An analysis of finance lease loans, by residual maturity period, is presented as follows:
An analysis of finance lease loans, by residual maturity period, is presented as follows:
Gross investment in finance leases receivable
Gross investment in finance leases receivable
Up to 1 year
1 to 5 years
Up to 1 year
More than 5 years
1 to 5 years
More than 5 years
Unrealized finance income in finance leases
Unrealized finance income in finance leases
Up to 1 year
1 to 5 years
Up to 1 year
More than 5 years
1 to 5 years
More than 5 years
Capital falling due
Capital falling due
Up to 1 year
1 to 5 years
Up to 1 year
More than 5 years
1 to 5 years
More than 5 years
Impairment
Impairment
31.12.2021
31.12.2021
(in thousands of Euros)
(in thousands of Euros)
31.12.2020
31.12.2020
278 587
693 762
278 587
533 443
693 762
1 505 792
533 443
1 505 792
43 611
94 599
43 611
91 120
94 599
229 330
91 120
229 330
234 976
599 163
234 976
442 323
599 163
1 276 462
442 323
1 276 462
( 226 204)
( 226 204)
1 050 258
1 050 258
270 188
761 487
270 188
571 105
761 487
1 602 780
571 105
1 602 780
44 830
67 455
44 830
32 654
67 455
144 939
32 654
144 939
225 358
694 032
225 358
538 451
694 032
1 457 841
538 451
1 457 841
( 220 447)
( 220 447)
1 237 394
1 237 394
Sales of Credit Portfolios
Sales of Credit Portfolios
2021
2021
Sale of a portfolio of non-performing loans (called Project Orion)
novobanco entered into purchase and sale agreements with a consortium of funds managed by WEST INVEST UK LIMITED
Sale of a portfolio of non-performing loans (called Project Orion)
PARTNERSHIP and LX INVESTMENT PARTNERS III S.À.R.L. for a portfolio of non-performing loans and related assets (the Project
novobanco entered into purchase and sale agreements with a consortium of funds managed by WEST INVEST UK LIMITED
Orion). The net book value of the loans at the date of derecognition amounted to Euro 72,0 million (gross amount of Euro 156,7
PARTNERSHIP and LX INVESTMENT PARTNERS III S.À.R.L. for a portfolio of non-performing loans and related assets (the Project
million), with an impact on the net income for the year fiscal year 2021 or circa Euro 1.8 million:
Orion). The net book value of the loans at the date of derecognition amounted to Euro 72,0 million (gross amount of Euro 156,7
million), with an impact on the net income for the year fiscal year 2021 or circa Euro 1.8 million:
Sales of Credit Portfolios
2021
Sale of a portfolio of non-performing loans (called Project Orion)
novobanco entered into purchase and sale agreements with a consortium of funds managed by WEST
INVEST UK LIMITED PARTNERSHIP and LX INVESTMENT PARTNERS III S.À.R.L. for a portfolio of non-
Impact on the Income Statement
Impact on the Income Statement
Gains or losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
Impairments or reversals of impairments on financial assets not measured at fair value through profit or loss
Gains or losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
Provisions or reversal of provisions
Impairments or reversals of impairments on financial assets not measured at fair value through profit or loss
Provisions or reversal of provisions
Impact on Net Income
performing loans and related assets (the Project Orion). The net book value of the loans at the date of
derecognition amounted to Euro 72,0 million (gross amount of Euro 156,7 million), with an impact on
the net income for the year fiscal year 2021 or circa Euro 1.8 million:
(in thousands of Euros)
31.12.2021
(in thousands of Euros)
31.12.2021
-9 329
18 395
-9 329
-7 310
18 395
-7 310
1 756
Impact on Net Income
Sale of a portfolio of non-performing loans (called Project Wilkinson)
On 5 March 2021, novobanco entered into a purchase and sale agreement for a portfolio of non-performing loans and related assets
Sale of a portfolio of non-performing loans (called Project Wilkinson)
(the Project Wilkinson), with a net book value of Euro 62,3 million (gross amount of Euro 210,4 million), with Burlington Loan
On 5 March 2021, novobanco entered into a purchase and sale agreement for a portfolio of non-performing loans and related assets
Management, a company owned and advised by companies affiliated and advised by Davidson Kempner European Partners, LLP.
(the Project Wilkinson), with a net book value of Euro 62,3 million (gross amount of Euro 210,4 million), with Burlington Loan
The impact of this operation on the net income for the fiscal year 2021 was reflected in a loss of Euro 4.5 million.
Management, a company owned and advised by companies affiliated and advised by Davidson Kempner European Partners, LLP.
The impact of this operation on the net income for the fiscal year 2021 was reflected in a loss of Euro 4.5 million.
1 756
Impact on the Income Statement
Impact on the Income Statement
Gains or losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
Impairments or reversals of impairments on financial assets not measured at fair value through profit or loss
Gains or losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
Impairments or reversals of impairments on financial assets not measured at fair value through profit or loss
Impact on Net Income
Impact on Net Income
(in thousands of Euros)
31.12.2021
(in thousands of Euros)
31.12.2021
-1 363
-3 175
-1 363
-3 175
-4 538
-4 538
366
51
51
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
An analysis of finance lease loans, by residual maturity period, is presented as follows:
Gross investment in finance leases receivable
Unrealized finance income in finance leases
Up to 1 year
1 to 5 years
More than 5 years
Up to 1 year
1 to 5 years
More than 5 years
Capital falling due
Up to 1 year
1 to 5 years
More than 5 years
Impairment
Sales of Credit Portfolios
2021
(in thousands of Euros)
31.12.2021
31.12.2020
278 587
693 762
533 443
1 505 792
43 611
94 599
91 120
229 330
234 976
599 163
442 323
1 276 462
( 226 204)
1 050 258
270 188
761 487
571 105
1 602 780
44 830
67 455
32 654
144 939
225 358
694 032
538 451
1 457 841
( 220 447)
1 237 394
Sale of a portfolio of non-performing loans (called Project Orion)
novobanco entered into purchase and sale agreements with a consortium of funds managed by WEST INVEST UK LIMITED
PARTNERSHIP and LX INVESTMENT PARTNERS III S.À.R.L. for a portfolio of non-performing loans and related assets (the Project
Orion). The net book value of the loans at the date of derecognition amounted to Euro 72,0 million (gross amount of Euro 156,7
million), with an impact on the net income for the year fiscal year 2021 or circa Euro 1.8 million:
Impact on the Income Statement
Gains or losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
Impairments or reversals of impairments on financial assets not measured at fair value through profit or loss
Provisions or reversal of provisions
Impact on Net Income
(in thousands of Euros)
31.12.2021
-9 329
18 395
-7 310
1 756
Sale of a portfolio of non-performing loans (called Project Wilkinson)
On 5 March 2021, novobanco entered into a purchase and sale agreement for a portfolio of non-
performing loans and related assets (the Project Wilkinson), with a net book value of Euro 62,3 million
(gross amount of Euro 210,4 million), with Burlington Loan Management, a company owned and advised
Sale of a portfolio of non-performing loans (called Project Wilkinson)
On 5 March 2021, novobanco entered into a purchase and sale agreement for a portfolio of non-performing loans and related assets
(the Project Wilkinson), with a net book value of Euro 62,3 million (gross amount of Euro 210,4 million), with Burlington Loan
Management, a company owned and advised by companies affiliated and advised by Davidson Kempner European Partners, LLP.
The impact of this operation on the net income for the fiscal year 2021 was reflected in a loss of Euro 4.5 million.
by companies affiliated and advised by Davidson Kempner European Partners, LLP. The impact of this
operation on the net income for the fiscal year 2021 was reflected in a loss of Euro 4.5 million.
Impact on the Income Statement
Gains or losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
Impairments or reversals of impairments on financial assets not measured at fair value through profit or loss
Impact on Net Income
2020
(in thousands of Euros)
31.12.2021
-1 363
-3 175
-4 538
2020
Sale of a portfolio of non-performing loans (called Project Carter)
On 23 December 2020, novobanco entered into a purchase and sale agreement for a portfolio of non-
performing loans and related assets (together, the Carter Project), with a net book value of Euro 34,1
Sale of a portfolio of non-performing loans (called Project Carter)
On 23 December 2020, novobanco entered into a purchase and sale agreement for a portfolio of non-performing loans and related
assets (together, the Carter Project), with a net book value of Euro 34,1 million (gross amount of Euro 79,1 million), to a company
owned by affiliated companies and advised by AGG Capital Management Limited and Christofferson, Robb & Company, LLC. The
impact of this operation on the net income for the fiscal year 2020 was reflected in a gain of Euro 2.3 million.
million (gross amount of Euro 79,1 million), to a company owned by affiliated companies and advised
by AGG Capital Management Limited and Christofferson, Robb & Company, LLC. The impact of this
operation on the net income for the fiscal year 2020 was reflected in a gain of Euro 2.3 million.
Impact on the Income Statement
Gains or losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
Impairments or reversals of impairments on financial assets not measured at fair value through profit or loss
Impact on Net Income
(in thousands of Euros)
51
31.12.2020
3 310
-983
2 327
NOTE 23 – DERIVATIVES – HEDGE ACCOUNTING AND FAIR VALUE CHANGES OF THE HEDGED ITEMS
As at 31 December 2021 and 31 December 2020, the fair value of the hedging derivatives is analysed as follows:
Hedging derivatives
Assets
Liabilities
Fair value component of the assets and liabilities hedged for interest rate risk
Financial assets
Securities (see Note 22)
Loans and advances to customers (see Note 22)
(in thousands of Euros)
31.12.2021
31.12.2020
20 150
( 44 460)
( 24 310)
13 606
( 72 543)
( 58 937)
( 3 136)
31 923
28 787
1 129
59 847
60 976
Changes in the fair value of the hedged assets and liabilities mentioned above and of the respective hedging derivatives are
recognized in the income statement in the caption Gains and losses from hedge accounting. (see Note 11).
The Bank calculates the “Credit Valuation Adjustment” (CVA) for derivative instruments in accordance with the methodology described
in Note 38 - Financial assets and liabilities held for trading.
367
As at 31 December 2021 and 2020, fair value hedging operations may be analyzed as follows:
Derivative
Hedged item
Hedged risk
Notional
Fair value of
derivatives (1)
Change in
fair value of
derivative in
period
Fair value
component of
item hedged(2)
(in thousands of Euros)
Change in fair
value
component of
item hedged
in period (2)
Interest Rate Swap/CIRS
Interest Rate Swap
Loans and advances to customers
Securities at amortized cost
Interest rate and
exchange rate
Interest rate
2 491 995
378 000
( 28 494)
4 184
31 004
3 675
31 923
( 3 136)
( 27 925)
( 4 265)
2 869 995
( 24 310)
34 679
28 787
( 32 190)
31.12.2021
31.12.2020
Derivative
Hedged item
Hedged risk
Notional
Fair value of
derivatives (1)
Change in
fair value of
derivative in
period
Fair value
component of
item hedged(2)
Interest Rate Swap/CIRS
Loans and advances to customers
Interest and exchange rates
Interest Rate Swap
Securities at amortized cost
Interest rate
3 347 176
378 000
( 59 602)
665
( 8 981)
801
59 847
1 129
3 725 176
( 58 937)
( 8 180)
60 976
(1) Includes accrued interest
(2) Attributable to the hedged risk
(1) Includes accrued interest
(2) Attributable to the hedged risk
On 31 December 2021, the ineffective part of the fair value hedging operations, which translated into a cost of Euro 0.2 million, was
recorded in the income statement (31 December 2020: profit of Euro 4.1 million). The bank periodically conducts tests of the
effectiveness of existing hedging relationships.
(in thousands of Euros)
Change in fair
value
component of
item hedged
in period (2)
11 189
1 130
12 319
52
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
2020
2020
Sale of a portfolio of non-performing loans (called Project Carter)
Sale of a portfolio of non-performing loans (called Project Carter)
On 23 December 2020, novobanco entered into a purchase and sale agreement for a portfolio of non-performing loans and related
On 23 December 2020, novobanco entered into a purchase and sale agreement for a portfolio of non-performing loans and related
assets (together, the Carter Project), with a net book value of Euro 34,1 million (gross amount of Euro 79,1 million), to a company
assets (together, the Carter Project), with a net book value of Euro 34,1 million (gross amount of Euro 79,1 million), to a company
owned by affiliated companies and advised by AGG Capital Management Limited and Christofferson, Robb & Company, LLC. The
owned by affiliated companies and advised by AGG Capital Management Limited and Christofferson, Robb & Company, LLC. The
impact of this operation on the net income for the fiscal year 2020 was reflected in a gain of Euro 2.3 million.
impact of this operation on the net income for the fiscal year 2020 was reflected in a gain of Euro 2.3 million.
Impact on the Income Statement
Impact on the Income Statement
Gains or losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
Gains or losses on derecognition of financial assets and liabilities not measured at fair value through profit or loss
Impairments or reversals of impairments on financial assets not measured at fair value through profit or loss
Impairments or reversals of impairments on financial assets not measured at fair value through profit or loss
Impact on Net Income
Impact on Net Income
NOTE 23 – DERIVATIVES – HEDGE ACCOUNTING
AND FAIR VALUE CHANGES OF THE HEDGED
ITEMS
As at 31 December 2021 and 31 December 2020, the fair value of the hedging derivatives is analysed
as follows:
NOTE 23 – DERIVATIVES – HEDGE ACCOUNTING AND FAIR VALUE CHANGES OF THE HEDGED ITEMS
NOTE 23 – DERIVATIVES – HEDGE ACCOUNTING AND FAIR VALUE CHANGES OF THE HEDGED ITEMS
As at 31 December 2021 and 31 December 2020, the fair value of the hedging derivatives is analysed as follows:
As at 31 December 2021 and 31 December 2020, the fair value of the hedging derivatives is analysed as follows:
Hedging derivatives
Hedging derivatives
Assets
Liabilities
Assets
Liabilities
Fair value component of the assets and liabilities hedged for interest rate risk
Fair value component of the assets and liabilities hedged for interest rate risk
Financial assets
Financial assets
Securities (see Note 22)
Loans and advances to customers (see Note 22)
Securities (see Note 22)
Loans and advances to customers (see Note 22)
(in thousands of Euros)
(in thousands of Euros)
31.12.2020
31.12.2020
3 310
3 310
-983
-983
2 327
2 327
(in thousands of Euros)
31.12.2021
31.12.2021
(in thousands of Euros)
31.12.2020
31.12.2020
20 150
( 44 460)
20 150
( 44 460)
( 24 310)
( 24 310)
( 3 136)
31 923
( 3 136)
31 923
28 787
28 787
13 606
( 72 543)
13 606
( 72 543)
( 58 937)
( 58 937)
1 129
59 847
1 129
59 847
60 976
60 976
Changes in the fair value of the hedged assets and liabilities mentioned above and of the respective
hedging derivatives are recognized in the income statement in the caption Gains and losses from hedge
accounting. (see Note 11).
Changes in the fair value of the hedged assets and liabilities mentioned above and of the respective hedging derivatives are
Changes in the fair value of the hedged assets and liabilities mentioned above and of the respective hedging derivatives are
recognized in the income statement in the caption Gains and losses from hedge accounting. (see Note 11).
recognized in the income statement in the caption Gains and losses from hedge accounting. (see Note 11).
The Bank calculates the “Credit Valuation Adjustment” (CVA) for derivative instruments in accordance with the methodology described
The Bank calculates the “Credit Valuation Adjustment” (CVA) for derivative instruments in accordance with the methodology described
in Note 38 - Financial assets and liabilities held for trading.
in Note 38 - Financial assets and liabilities held for trading.
As at 31 December 2021 and 2020, fair value hedging operations may be analyzed as follows:
As at 31 December 2021 and 2020, fair value hedging operations may be analyzed as follows:
The Bank calculates the “Credit Valuation Adjustment” (CVA) for derivative instruments in accordance
with the methodology described in Note 38 - Financial assets and liabilities held for trading.
As at 31 December 2021 and 2020, fair value hedging operations may be analyzed as follows:
Derivative
Derivative
Hedged item
Hedged item
Loans and advances to customers
Loans and advances to customers
Securities at amortized cost
Securities at amortized cost
Interest Rate Swap/CIRS
Interest Rate Swap
Interest Rate Swap/CIRS
Interest Rate Swap
(1) Includes accrued interest
(2) Attributable to the hedged risk
(1) Includes accrued interest
(2) Attributable to the hedged risk
Derivative
Derivative
Hedged item
Hedged item
31.12.2021
31.12.2021
Hedged risk
Hedged risk
Interest rate and
exchange rate
Interest rate and
Interest rate
exchange rate
Interest rate
31.12.2020
31.12.2020
Hedged risk
Hedged risk
Notional
Notional
Fair value of
derivatives (1)
Fair value of
derivatives (1)
Change in
fair value of
Change in
derivative in
fair value of
period
derivative in
period
Fair value
component of
Fair value
item hedged(2)
component of
item hedged(2)
(in thousands of Euros)
(in thousands of Euros)
Change in fair
value
Change in fair
component of
value
item hedged
component of
in period (2)
item hedged
in period (2)
2 491 995
378 000
2 491 995
378 000
2 869 995
( 28 494)
4 184
( 28 494)
4 184
( 24 310)
2 869 995
( 24 310)
31 004
3 675
31 004
3 675
34 679
34 679
31 923
( 3 136)
31 923
( 3 136)
28 787
28 787
( 27 925)
( 4 265)
( 27 925)
( 4 265)
( 32 190)
( 32 190)
(in thousands of Euros)
Notional
Notional
Fair value of
derivatives (1)
Fair value of
derivatives (1)
Change in
fair value of
Change in
derivative in
fair value of
period
derivative in
period
( 8 981)
801
( 8 981)
801
( 8 180)
Fair value
component of
Fair value
item hedged(2)
component of
item hedged(2)
59 847
1 129
59 847
1 129
60 976
(in thousands of Euros)
Change in fair
value
Change in fair
component of
value
item hedged
component of
in period (2)
item hedged
in period (2)
11 189
1 130
11 189
1 130
12 319
Interest Rate Swap/CIRS
Interest Rate Swap
Interest Rate Swap/CIRS
Interest Rate Swap
Loans and advances to customers
Securities at amortized cost
Loans and advances to customers
Securities at amortized cost
Interest and exchange rates
Interest rate
Interest and exchange rates
Interest rate
3 347 176
378 000
3 347 176
378 000
3 725 176
( 59 602)
665
( 59 602)
665
( 58 937)
(1) Includes accrued interest
(2) Attributable to the hedged risk
(1) Includes accrued interest
(2) Attributable to the hedged risk
On 31 December 2021, the ineffective part of the fair value hedging operations, which translated into a cost of Euro 0.2 million, was
On 31 December 2021, the ineffective part of the fair value hedging operations, which translated into a cost of Euro 0.2 million, was
recorded in the income statement (31 December 2020: profit of Euro 4.1 million). The bank periodically conducts tests of the
recorded in the income statement (31 December 2020: profit of Euro 4.1 million). The bank periodically conducts tests of the
effectiveness of existing hedging relationships.
effectiveness of existing hedging relationships.
3 725 176
( 58 937)
12 319
60 976
( 8 180)
368
52
52
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
On 31 December 2021, the ineffective part of the fair value hedging operations, which translated into
a cost of Euro 0.2 million, was recorded in the income statement (31 December 2020: profit of Euro 4.1
million). The bank periodically conducts tests of the effectiveness of existing hedging relationships.
Transactions with risk management and hedge derivatives as at 31 December 2021 and 2020, by maturity, can be analyzed as
follows:
Transactions with risk management and hedge derivatives as at 31 December 2021 and 2020, by
maturity, can be analyzed as follows:
(in thousands of Euros)
Transactions with risk management and hedge derivatives as at 31 December 2021 and 2020, by maturity, can be analyzed as
follows:
Notional
Notional
Fair value (net)
Fair value (net)
31.12.2020
31.12.2021
Buy
Sell
Buy
Sell
(in thousands of Euros)
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
Notional
Buy
65 000
76 537
425 032
868 428
65 000
1 434 997
76 537
425 032
868 428
Sell
31.12.2021
65 000
76 537
425 032
868 429
65 000
1 434 998
76 537
425 032
868 429
( 705)
( 1 200)
Fair value (net)
1 514
( 23 919)
( 705)
( 24 310)
( 1 200)
1 514
( 23 919)
NOTE 24 – INVESTMENTS IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
1 434 997
1 434 998
( 24 310)
Investments in subsidiaries, joint ventures and associates are presented as follows:
NOTE 24 – INVESTMENTS IN SUBSIDIARIES,
JOINT VENTURES AND ASSOCIATES
Investments in subsidiaries, joint ventures and associates are presented as follows:
Nominal value
(euros)
Nº of shares
Direct
participation
in capital
31.12.2021
Investments in subsidiaries, joint ventures and associates are presented as follows:
Impairment
Net Value
Nº of shares
Cost of
participation
NOTE 24 – INVESTMENTS IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
Notional
Buy
-
173 866
811 060
877 662
-
1 862 588
173 866
811 060
877 662
31.12.2020
Sell
-
173 866
811 060
877 662
-
1 862 588
173 866
811 060
877 662
-
( 862)
Fair value (net)
( 8 163)
( 49 912)
-
( 58 937)
( 862)
( 8 163)
( 49 912)
1 862 588
1 862 588
( 58 937)
(in thousands of Euros)
31.12.2020
Direct
participatio
n in capital
Nominal value
(euros)
Cost of
participation
Impairment
Net Value
Net Value
Impairment
-
novobanco dos Açores
-
NB Finance
( 17 501)
BEST
( 48 293)
ES Tech Ventures
-
GNB GA
( 20 602)
GNB Concessões
-
novobanco dos Açores
( 4 460)
ESEGUR
-
NB Finance
( 8)
ES Representações
( 17 501)
BEST
-
Locarent
( 48 293)
ES Tech Ventures
( 55 514)
NB África
-
GNB GA
-
Unicre
( 20 602)
GNB Concessões
-
Ijar Leasing Algérie
( 4 460)
ESEGUR
-
Edenred Portugal
( 8)
ES Representações
( 100)
Multipessoal
-
Locarent
-
Aroleri
( 55 514)
NB África
( 146 478)
-
Unicre
-
Ijar Leasing Algérie
-
Edenred Portugal
During 2021 the associated company Ijar Leasing was transferred to non-current assets held for sale as it is in the process of selling
( 100)
Multipessoal
-
Aroleri
assets with the objective of their sale in the short term (see Note 29). The associates ESEGUR and Multipessoal were transferred
from non-current assets held for sale to investments in associates, as the sales processes were not active at year end.
-
(in thousands of Euros)
-
( 64 818)
( 50 666)
-
( 20 602)
-
-
-
( 8)
( 64 818)
-
( 50 666)
( 55 514)
-
-
( 20 602)
( 8 035)
-
-
( 8)
-
-
-
( 55 514)
( 199 643)
-
( 8 035)
-
-
-
5.00
1.00
31.12.2020
1.00
Nominal value
1.00
(euros)
5.00
5.00
5.00
-
1.00
0.16
1.00
5.00
1.00
5.00
5.00
5.00
5.00
61.94
-
0.01
0.16
-
5.00
-
5.00
5.00
61.94
0.01
-
-
5.00
1.00
31.12.2021
1.00
Nominal value
1.00
(euros)
5.00
5.00
5.00
5.00
1.00
0.16
1.00
5.00
1.00
5.00
5.00
5.00
5.00
-
5.00
0.01
0.16
5.00
5.00
1.00
5.00
5.00
-
0.01
5.00
1.00
10 308
1 700
100 418
Cost of
71 500
participation
86 722
20 602
10 308
9 634
1 700
8
100 418
2 967
71 500
66 500
86 722
11 497
20 602
-
9 634
4 984
8
100
2 967
604
66 500
387 544
11 497
-
4 984
100
604
10 308
1 700
100 418
Cost of
71 500
participation
86 722
20 602
10 308
-
1 700
8
100 418
2 967
71 500
66 500
86 722
11 497
20 602
12 361
-
4 984
8
-
2 967
-
66 500
389 567
11 497
12 361
4 984
-
-
57.53%
100.00%
100.00%
Direct
100.00%
participation
100.00%
in capital
98.96%
57.53%
44.00%
100.00%
99.99%
100.00%
50.00%
100.00%
100.00%
100.00%
17.50%
98.96%
-
44.00%
50.00%
99.99%
22.52%
50.00%
100.00%
100.00%
17.50%
-
50.00%
22.52%
100.00%
2 144 404
100 000
62 999 700
71 500 000
Nº of shares
2 350 000
942 306
2 144 404
242 000
100 000
49 995
62 999 700
525 000
71 500 000
13 300 000
2 350 000
350 029
942 306
-
242 000
101 477 601
49 995
20 000
525 000
3 500
13 300 000
350 029
-
101 477 601
20 000
3 500
2 144 404
100 000
62 999 700
71 500 000
Nº of shares
2 350 000
942 306
2 144 404
-
100 000
49 995
62 999 700
525 000
71 500 000
13 300 000
2 350 000
350 029
942 306
122 499
-
101 477 601
49 995
-
525 000
-
13 300 000
350 029
122 499
101 477 601
-
-
57.53%
100.00%
100.00%
Direct
100.00%
participatio
100.00%
n in capital
98.97%
57.53%
-
100.00%
99.99%
100.00%
50.00%
100.00%
100.00%
100.00%
17.50%
98.97%
18.85%
-
50.00%
99.99%
-
50.00%
-
100.00%
17.50%
18.85%
50.00%
-
-
10 308
1 700
82 917
23 207
86 722
-
10 308
5 174
1 700
-
82 917
2 967
23 207
10 986
86 722
11 497
-
-
5 174
4 984
-
-
2 967
604
10 986
241 066
11 497
-
4 984
-
604
10 308
1 700
35 600
20 834
86 722
-
10 308
-
1 700
-
35 600
2 967
20 834
10 986
86 722
11 497
-
4 326
-
4 984
-
-
2 967
-
10 986
189 924
11 497
4 326
4 984
-
-
Impairment
( 199 643)
( 146 478)
Net Value
389 567
189 924
387 544
241 066
During 2021 the associated company Ijar Leasing was transferred to non-current assets held for sale as it is in the process of selling
The changes in impairment losses for investments in associates are presented as follows:
assets with the objective of their sale in the short term (see Note 29). The associates ESEGUR and Multipessoal were transferred
(in thousands of Euros)
from non-current assets held for sale to investments in associates, as the sales processes were not active at year end.
The changes in impairment losses for investments in associates are presented as follows:
Balance at the beginning of the exercise
During 2021 the associated company Ijar Leasing was transferred to non-current assets held for sale
as it is in the process of selling assets with the objective of their sale in the short term (see Note 29).
The associates ESEGUR and Multipessoal were transferred from non-current assets held for sale to
Charges
investments in associates, as the sales processes were not active at year end.
Uses
Reversals
Foreign exchange differences (a)
Charges
Uses
Reversals
Foreign exchange differences (a)
The changes in impairment losses for investments in associates are presented as follows:
Balance at the beginning of the exercise
Balance at the end of the exercise
(a) In the exercise of 2021, it includes 8 035 thousand Euros of impairment to Ijar Leasing transferred to Discontinued Operations (See Note 29).
31.12.2021
31.12.2020
31.12.2021
199 643
31.12.2020
182 184
(in thousands of Euros)
-
48 388
( 22 480)
-
( 49 691)
( 7 103)
182 184
199 643
( 1 346)
( 3 474)
48 388
-
199 643
146 478
( 22 480)
-
( 7 103)
( 49 691)
( 1 346)
( 3 474)
Balance at the end of the exercise
146 478
199 643
(a) In the exercise of 2021, it includes 8 035 thousand Euros of impairment to Ijar Leasing transferred to Discontinued Operations (See Note 29).
53
53
369
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Transactions with risk management and hedge derivatives as at 31 December 2021 and 2020, by maturity, can be analyzed as
follows:
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
Notional
Buy
Sell
65 000
76 537
425 032
868 428
65 000
76 537
425 032
868 429
31.12.2021
31.12.2020
Fair value (net)
Fair value (net)
(in thousands of Euros)
Notional
Buy
Sell
-
173 866
811 060
877 662
-
173 866
811 060
877 662
( 705)
( 1 200)
1 514
( 23 919)
( 24 310)
-
( 862)
( 8 163)
( 49 912)
( 58 937)
1 434 997
1 434 998
1 862 588
1 862 588
NOTE 24 – INVESTMENTS IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
Investments in subsidiaries, joint ventures and associates are presented as follows:
novobanco dos Açores
NB Finance
BEST
ES Tech Ventures
GNB GA
GNB Concessões
ESEGUR
ES Representações
Locarent
NB África
Unicre
Ijar Leasing Algérie
Edenred Portugal
Multipessoal
Aroleri
2 144 404
100 000
62 999 700
71 500 000
2 350 000
942 306
242 000
49 995
525 000
13 300 000
350 029
-
101 477 601
20 000
3 500
57.53%
100.00%
100.00%
100.00%
100.00%
98.96%
44.00%
99.99%
50.00%
100.00%
17.50%
-
50.00%
22.52%
100.00%
Nº of shares
participation
Direct
in capital
31.12.2021
Nominal value
Cost of
(euros)
participation
Impairment
Net Value
Nº of shares
5.00
1.00
1.00
1.00
5.00
5.00
5.00
0.16
5.00
5.00
5.00
-
0.01
5.00
1.00
10 308
1 700
100 418
71 500
86 722
20 602
9 634
8
2 967
66 500
11 497
-
4 984
100
604
-
-
-
-
-
-
-
-
( 17 501)
( 48 293)
( 20 602)
( 4 460)
( 8)
( 55 514)
( 100)
10 308
1 700
82 917
23 207
86 722
5 174
2 967
10 986
11 497
-
-
-
-
604
2 144 404
100 000
62 999 700
71 500 000
2 350 000
942 306
49 995
525 000
13 300 000
350 029
122 499
-
-
-
4 984
101 477 601
Direct
participatio
n in capital
57.53%
100.00%
100.00%
100.00%
100.00%
98.97%
-
99.99%
50.00%
100.00%
17.50%
18.85%
50.00%
-
-
31.12.2020
(in thousands of Euros)
Nominal value
Cost of
(euros)
participation
Impairment
Net Value
5.00
1.00
1.00
1.00
5.00
5.00
-
0.16
5.00
5.00
5.00
61.94
0.01
-
-
10 308
1 700
100 418
71 500
86 722
20 602
-
8
2 967
66 500
11 497
12 361
4 984
-
-
( 64 818)
( 50 666)
( 20 602)
( 8)
( 55 514)
( 8 035)
-
-
-
-
-
-
-
-
-
10 308
1 700
35 600
20 834
86 722
2 967
10 986
11 497
4 326
4 984
-
-
-
-
-
387 544
( 146 478)
241 066
389 567
( 199 643)
189 924
During 2021 the associated company Ijar Leasing was transferred to non-current assets held for sale as it is in the process of selling
assets with the objective of their sale in the short term (see Note 29). The associates ESEGUR and Multipessoal were transferred
from non-current assets held for sale to investments in associates, as the sales processes were not active at year end.
The changes in impairment losses for investments in associates are presented as follows:
Balance at the beginning of the exercise
Charges
Uses
Reversals
Foreign exchange differences (a)
Balance at the end of the exercise
(a) In the exercise of 2021, it includes 8 035 thousand Euros of impairment to Ijar Leasing transferred to Discontinued Operations (See Note 29).
(in thousands of Euros)
31.12.2021
31.12.2020
199 643
-
-
( 49 691)
( 3 474)
182 184
48 388
( 22 480)
( 7 103)
( 1 346)
146 478
199 643
NOTE 25 – PROPERTY, PLANT AND EQUIPMENT
This caption as of 31 December 2021 and 31 December 2020 is analysed as follows:
NOTE 25 – PROPERTY, PLANT AND EQUIPMENT
This caption as of 31 December 2021 and 31 December 2020 is analysed as follows:
Real estate properties
For own use
Improvements in leasehold properties
Equipment
Computer equipment
Fixtures
Furniture
Security equipment
Office equipment
Transport equipment
Other
Right-of-Use Assets
Real estate properties
Equipment
Work in progress
Improvements in leasehold properties
Real estate properties
Others
Accumulated impairment
Accumulated depreciation
(in thousands of Euros)
31.12.2021
31.12.2020
181 868
117 734
220 386
132 844
299 602
353 230
109 729
41 687
51 116
21 223
7 898
562
134
101 230
54 828
48 803
23 697
7 488
562
160
232 349
236 768
53
107 573
8 468
116 041
69 375
8 889
78 264
431
5 685
336
6 452
-
1
1 417
1 418
654 444
669 680
( 12 071)
( 410 954)
( 13 385)
( 467 327)
231 419
188 968
54
370
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The changes in this caption were as follows:
The changes in this caption were as follows:
Acquisition cost
Balance at 31 December 2019
Acquisitions
Disposals / write-offs
Transfers (a)
Exchange variation and other movements (b)
Balance at 31 December 2020
Acquisitions
Disposals / write-offs (e)
Transfers (d)
Balance at 31 December 2021
Depreciation
Balance at 31 December 2019
Depreciation
Disposals / write-offs
Transfers (a)
Foreign exchange differences and other (c)
Balance at 31 December 2020
Depreciation
Disposals / write-offs (e)
Transfers
Foreign exchange differences and other
Balance at 31 December 2021
Impairment
Balance at 31 December 2019
Impairment losses
Balance at 31 December 2020
Impairment losses
Reversion of impairment losses
Transfers
Balance at 31 December 2021
Real estate
properties
Equipment
Right-of-Use
Assets
Work in
progress
Total
(in thousands of Euros)
346 552
20 966
( 3 531)
( 1 665)
( 9 092)
353 230
30 013
( 88 521)
4 880
262 032
11 341
( 9 332)
( 153)
( 27 120)
236 768
24 184
( 28 764)
161
74 691
9 645
( 6 841)
-
769
78 264
46 182
( 8 405)
-
299 602
232 349
116 041
87
1 446
-
( 115)
-
1 418
16 251
( 4 206)
( 7 011)
6 452
227 152
4 711
( 3 528)
( 903)
( 2 272)
225 160
5 146
( 51 182)
( 1 512)
3 268
235 093
9 002
( 8 983)
( 143)
( 24 254)
210 715
10 044
( 28 224)
( 137)
( 1)
180 880
192 397
10 609
2 776
13 385
3 484
( 5 101)
303
12 071
-
-
-
-
-
-
-
15 756
18 720
( 4 984)
1 960
31 452
12 412
( 6 188)
-
1
37 677
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
683 362
43 398
( 19 704)
( 1 933)
( 35 443)
669 680
116 630
( 129 896)
( 1 970)
654 444
478 001
32 433
( 17 495)
( 1 046)
( 24 566)
467 327
27 602
( 85 594)
( 1 649)
3 268
410 954
10 609
2 776
13 385
3 484
( 5 101)
303
12 071
Net book value at 31 December 2021
106 651
39 952
78 364
6 452
231 419
Net book value at 31 December 2020
(a) Includes 1,951 thousand euros of fixed assets (property and equipment) and 1,064 thousands of euros of accumulated depreciation related to discontinued branches that were transferred at net value to the appropriate balance sheet
items
114 685
188 968
26 053
46 812
1 418
(b) Includes 9,005 and 27,118 thousand euros of property and equipment from the Spanish Branch transferred to discontinued activities during the year 2020
(c) It includes 2,034 and 24,274 thousand euros of depreciation related to the properties and equipment of the Spanish Branch transferred to discontinued activities during the year 2020.
(d) Includes 3,471 thousand euros of fixed assets (property and equipment) and 1,650 thousand euros of accumulated depreciation related to discontinued branches that were transferred at net value to the appropriate balance sheet items .
(e) Includes 66,483 thousand euros of fixed assets (real estate and equipment) and 25,068 thousand euros of accumulated depreciation referring to Own Service Real Estate that was sold to Real Estate Funds of the novobanco Group.
In the fiscal year 2021, as part of the reorganization of the Real Estate Funds held by the novobanco, the Bank sold own service
properties to the Real Estate Funds, recording a loss of EUR 14,751 thousand (see Note 12). These properties were subsequently
leased to the Bank and are being recorded in accordance with IFRS 16.
In the fiscal year 2021, as part of the reorganization of the Real Estate Funds held by the novobanco,
the Bank sold own service properties to the Real Estate Funds, recording a loss of EUR 14,751 thousand
(see Note 12). These properties were subsequently leased to the Bank and are being recorded in
accordance with IFRS 16.
NOTE 26 – INTANGIBLE ASSETS
This caption as at 31 December 2021 and 2020, is analyzed as follows:
Internally developed
Software - Automatic data processing system
Acquired from third parties
Software - Automatic data processing system
Work in progress
Accumulated amortization
371
(in thousands of Euros)
31.12.2021
31.12.2020
65 373
65 373
379 779
346 389
445 152
411 762
13 410
21 420
458 562
433 182
( 391 047)
( 384 851)
67 515
48 331
55
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The changes in this caption were as follows:
Exchange variation and other movements (b)
Acquisition cost
Balance at 31 December 2019
Acquisitions
Disposals / write-offs
Transfers (a)
Balance at 31 December 2020
Acquisitions
Disposals / write-offs (e)
Transfers (d)
Balance at 31 December 2021
Depreciation
Balance at 31 December 2019
Depreciation
Disposals / write-offs
Transfers (a)
Foreign exchange differences and other (c)
Balance at 31 December 2020
Depreciation
Disposals / write-offs (e)
Transfers
Foreign exchange differences and other
Balance at 31 December 2021
Impairment
Balance at 31 December 2019
Impairment losses
Balance at 31 December 2020
Impairment losses
Reversion of impairment losses
Transfers
Balance at 31 December 2021
Real estate
properties
Equipment
Right-of-Use
Assets
Work in
progress
Total
(in thousands of Euros)
299 602
232 349
116 041
346 552
20 966
( 3 531)
( 1 665)
( 9 092)
353 230
30 013
( 88 521)
4 880
227 152
4 711
( 3 528)
( 903)
( 2 272)
225 160
5 146
( 51 182)
( 1 512)
3 268
10 609
2 776
13 385
3 484
( 5 101)
303
12 071
262 032
11 341
( 9 332)
( 153)
( 27 120)
236 768
24 184
( 28 764)
161
235 093
9 002
( 8 983)
( 143)
( 24 254)
210 715
10 044
( 28 224)
( 137)
( 1)
-
-
-
-
-
-
-
74 691
9 645
( 6 841)
-
769
78 264
46 182
( 8 405)
-
15 756
18 720
( 4 984)
1 960
31 452
12 412
( 6 188)
-
1
-
-
-
-
-
-
-
180 880
192 397
37 677
87
1 446
( 115)
-
-
1 418
16 251
( 4 206)
( 7 011)
6 452
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
683 362
43 398
( 19 704)
( 1 933)
( 35 443)
669 680
116 630
( 129 896)
( 1 970)
654 444
478 001
32 433
( 17 495)
( 1 046)
( 24 566)
467 327
27 602
( 85 594)
( 1 649)
3 268
410 954
10 609
2 776
13 385
3 484
( 5 101)
303
12 071
Net book value at 31 December 2021
106 651
39 952
78 364
6 452
231 419
Net book value at 31 December 2020
114 685
26 053
46 812
1 418
188 968
(a) Includes 1,951 thousand euros of fixed assets (property and equipment) and 1,064 thousands of euros of accumulated depreciation related to discontinued branches that were transferred at net value to the appropriate balance sheet
items
(b) Includes 9,005 and 27,118 thousand euros of property and equipment from the Spanish Branch transferred to discontinued activities during the year 2020
(c) It includes 2,034 and 24,274 thousand euros of depreciation related to the properties and equipment of the Spanish Branch transferred to discontinued activities during the year 2020.
(d) Includes 3,471 thousand euros of fixed assets (property and equipment) and 1,650 thousand euros of accumulated depreciation related to discontinued branches that were transferred at net value to the appropriate balance sheet items .
(e) Includes 66,483 thousand euros of fixed assets (real estate and equipment) and 25,068 thousand euros of accumulated depreciation referring to Own Service Real Estate that was sold to Real Estate Funds of the novobanco Group.
In the fiscal year 2021, as part of the reorganization of the Real Estate Funds held by the novobanco, the Bank sold own service
properties to the Real Estate Funds, recording a loss of EUR 14,751 thousand (see Note 12). These properties were subsequently
leased to the Bank and are being recorded in accordance with IFRS 16.
NOTE 26 – INTANGIBLE ASSETS
This caption as at 31 December 2021 and 2020, is analyzed as follows:
NOTE 26 – INTANGIBLE ASSETS
This caption as at 31 December 2021 and 2020, is analyzed as follows:
Internally developed
Software - Automatic data processing system
Acquired from third parties
Software - Automatic data processing system
Work in progress
Accumulated amortization
(in thousands of Euros)
31.12.2021
31.12.2020
65 373
65 373
379 779
346 389
445 152
411 762
13 410
21 420
458 562
433 182
( 391 047)
( 384 851)
67 515
48 331
Internally generated intangible assets include expenses incurred by the Bank’s units specializing in the
implementation of IT solutions that will bring future economic benefits (see Note 6.24).
Internally generated intangible assets include expenses incurred by the Bank's units specializing in the implementation of IT solutions
that will bring future economic benefits (see Note 6.24).
55
The changes in this caption were as follows:
The changes in this caption were as follows:
Automatic data processing
system
Work in progress
Total
(in thousands of Euros)
Acquisition cost
Balance as at 31 December 2019
Acquisitions
Acquired from third parties
Disposals / write-offs
Transfers
Foreign exchange differences and other (a)
Balance as at 31 December 2020
Acquisitions
Acquired from third parties
Transfers
Balance as at 31 December 2021
Amortizations
Balance as at 31 December 2019
Amortization for the period
Disposals / write-offs
Foreign exchange differences and other (b)
Balance as at 31 December 2020
Amortization for the period
Foreign exchange differences and other
Balance as at 31 December 2021
Net balance at 31 December 2021
Net balance at 31 December 2020
429 332
2 373
( 20)
20 161
( 40 084)
411 762
3 209
30 181
445 152
420 735
2 600
( 20)
( 38 464)
384 851
6 197
( 1)
391 047
54 105
26 911
17 446
24 134
-
( 20 161)
1
21 420
22 171
( 30 181)
13 410
-
-
-
-
-
-
-
-
13 410
21 420
446 778
26 507
( 20)
-
( 40 083)
433 182
25 380
-
458 562
420 735
2 600
( 20)
( 38 464)
384 851
6 197
( 1)
391 047
67 515
48 331
(a) It includes 40 083 thousand Euros of investment projects assigned to the Spanish Branch transferred to discontinued operations during the year 2020.
(b) It includes 38 463 thousand euros of investment projects related to the Spanish Branch that were transferred to discontinued operations during the year 2020.
NOTE 27 – INCOME TAXES
The deferred tax assets and liabilities recognized in the balance sheet as of 31 December 2021 and 2020 may be analyzed as follows:
372
The deferred tax assets and liabilities recognized in the balance sheet in this period are as follows:
Corporate tax recoverable
Current tax
Other
Deferred tax
Financial instruments
Credit impairment (not covered by the special regime)
Credit impairment (covered by the special regime)
Other tangible assets
Provisions
Pensions
Temporary Branch Differences
Deferred tax asset / (liability)
31.12.2021
31.12.2020
Assets
Liabilities
Assets
Liabilities
(in thousands of Euros)
35 448
-
35 448
741 321
4 703
4 606
97
-
771 854
-
-
-
5 536
5 462
74
-
776 769
4 703
771 854
5 536
Assets
Liabilities
Net
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2020
(in thousands of Euros)
91 763
337 267
267 043
82 092
48 534
-
-
64 012
387 927
400 414
38 975
31 185
-
-
(77 349)
( 136 845)
( 8 029)
( 8 203)
-
-
-
-
( 5 611)
( 72 833)
387 927
400 414
( 8 203)
38 975
31 185
( 5 611)
14 414
337 267
267 043
( 8 029)
82 092
48 534
-
-
826 699
922 513
( 85 378)
( 150 659)
741 321
771 854
-
-
-
-
-
-
Asset / liability set-off for deferred tax purposes
( 85 378)
( 150 659)
85 378
150 659
-
Net Deferred tax asset / (liability)
741 321
771 854
-
741 321
771 854
As at 31 December 2021 the deferred tax related to temporary differences was determined based on an aggregate rate of 31%,
resulting from the sum of the general IRC rate (21%), the Municipal Surcharge of 1.5% and an average rate of State Surcharge of
8.5%.
56
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Internally generated intangible assets include expenses incurred by the Bank's units specializing in the implementation of IT solutions
Internally generated intangible assets include expenses incurred by the Bank's units specializing in the implementation of IT solutions
that will bring future economic benefits (see Note 6.24).
that will bring future economic benefits (see Note 6.24).
The changes in this caption were as follows:
The changes in this caption were as follows:
Automatic data processing
system
Automatic data processing
system
429 332
Work in progress
Work in progress
Total
(in thousands of Euros)
Total
(in thousands of Euros)
Acquisition cost
Balance as at 31 December 2019
Acquisitions
Acquisition cost
Balance as at 31 December 2019
Acquired from third parties
Disposals / write-offs
Acquisitions
Transfers
Acquired from third parties
Foreign exchange differences and other (a)
Disposals / write-offs
Transfers
Balance as at 31 December 2020
Foreign exchange differences and other (a)
Acquisitions
Balance as at 31 December 2020
Acquired from third parties
Transfers
Acquisitions
Acquired from third parties
Balance as at 31 December 2021
Transfers
Amortizations
Balance as at 31 December 2021
Balance as at 31 December 2019
Amortization for the period
Amortizations
Disposals / write-offs
Balance as at 31 December 2019
Foreign exchange differences and other (b)
Amortization for the period
Disposals / write-offs
Balance as at 31 December 2020
Foreign exchange differences and other (b)
Amortization for the period
Foreign exchange differences and other
Balance as at 31 December 2020
Balance as at 31 December 2021
Amortization for the period
Foreign exchange differences and other
Net balance at 31 December 2021
Balance as at 31 December 2021
2 373
429 332
( 20)
20 161
2 373
( 40 084)
( 20)
20 161
411 762
( 40 084)
3 209
411 762
30 181
3 209
445 152
30 181
445 152
420 735
2 600
( 20)
420 735
( 38 464)
2 600
( 20)
384 851
( 38 464)
6 197
( 1)
384 851
6 197
391 047
( 1)
54 105
391 047
17 446
24 134
17 446
-
( 20 161)
24 134
1
-
( 20 161)
21 420
1
22 171
21 420
( 30 181)
22 171
13 410
( 30 181)
13 410
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13 410
-
Net balance at 31 December 2020
Net balance at 31 December 2021
(a) It includes 40 083 thousand Euros of investment projects assigned to the Spanish Branch transferred to discontinued operations during the year 2020.
Net balance at 31 December 2020
(b) It includes 38 463 thousand euros of investment projects related to the Spanish Branch that were transferred to discontinued operations during the year 2020.
(a) It includes 40 083 thousand Euros of investment projects assigned to the Spanish Branch transferred to discontinued operations during the year 2020.
26 911
54 105
26 911
21 420
13 410
21 420
446 778
26 507
446 778
( 20)
26 507
-
( 40 083)
( 20)
-
433 182
( 40 083)
25 380
433 182
25 380
458 562
-
-
458 562
420 735
2 600
( 20)
420 735
( 38 464)
2 600
( 20)
384 851
( 38 464)
6 197
( 1)
384 851
6 197
391 047
( 1)
67 515
391 047
48 331
67 515
48 331
NOTE 27 – INCOME TAXES
(b) It includes 38 463 thousand euros of investment projects related to the Spanish Branch that were transferred to discontinued operations during the year 2020.
NOTE 27 – INCOME TAXES
The deferred tax assets and liabilities recognized in the balance sheet as of 31 December 2021 and
NOTE 27 – INCOME TAXES
The deferred tax assets and liabilities recognized in the balance sheet as of 31 December 2021 and 2020 may be analyzed as follows:
2020 may be analyzed as follows:
The deferred tax assets and liabilities recognized in the balance sheet as of 31 December 2021 and 2020 may be analyzed as follows:
31.12.2021
31.12.2020
(in thousands of Euros)
Current tax
Current tax
Corporate tax recoverable
Other
Corporate tax recoverable
Deferred tax
Other
Deferred tax
Assets
Liabilities
31.12.2021
Assets
35 448
-
35 448
35 448
-
741 321
35 448
776 769
741 321
4 703
Liabilities
4 606
4 703
97
4 606
-
97
4 703
-
(in thousands of Euros)
Liabilities
Assets
31.12.2020
Assets
-
-
-
-
-
771 854
-
771 854
771 854
5 536
Liabilities
5 462
5 536
74
5 462
-
74
5 536
-
The deferred tax assets and liabilities recognized in the balance sheet in this period are as follows:
776 769
4 703
771 854
5 536
The deferred tax assets and liabilities recognized in the balance sheet in this period are as follows:
The deferred tax assets and liabilities recognized in the balance sheet in this period are as follows:
Liabilities
Assets
(in thousands of Euros)
Net
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
(in thousands of Euros)
31.12.2020
Financial instruments
Credit impairment (not covered by the special regime)
Credit impairment (covered by the special regime)
Financial instruments
Other tangible assets
Credit impairment (not covered by the special regime)
Provisions
Credit impairment (covered by the special regime)
Pensions
Other tangible assets
Temporary Branch Differences
Provisions
Pensions
Deferred tax asset / (liability)
Temporary Branch Differences
Asset / liability set-off for deferred tax purposes
Deferred tax asset / (liability)
Net Deferred tax asset / (liability)
Asset / liability set-off for deferred tax purposes
Assets
Liabilities
Net
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
91 763
337 267
267 043
91 763
-
337 267
82 092
267 043
48 534
-
-
82 092
48 534
826 699
-
( 85 378)
826 699
64 012
387 927
400 414
64 012
-
387 927
38 975
400 414
31 185
-
-
38 975
31 185
922 513
-
( 150 659)
922 513
(77 349)
-
-
(77 349)
( 8 029)
-
-
-
-
( 8 029)
-
-
-
( 85 378)
-
85 378
( 85 378)
( 136 845)
-
-
( 136 845)
( 8 203)
-
-
-
-
( 8 203)
( 5 611)
-
-
( 150 659)
( 5 611)
150 659
( 150 659)
14 414
337 267
267 043
14 414
( 8 029)
337 267
82 092
267 043
48 534
( 8 029)
-
82 092
48 534
741 321
-
-
741 321
31.12.2020
( 72 833)
387 927
400 414
( 72 833)
( 8 203)
387 927
38 975
400 414
31 185
( 8 203)
( 5 611)
38 975
31 185
771 854
( 5 611)
-
771 854
741 321
( 85 378)
771 854
( 150 659)
-
85 378
-
150 659
741 321
-
771 854
-
741 321
Net Deferred tax asset / (liability)
As at 31 December 2021 the deferred tax related to temporary differences was determined based on an aggregate rate of 31%,
resulting from the sum of the general IRC rate (21%), the Municipal Surcharge of 1.5% and an average rate of State Surcharge of
As at 31 December 2021 the deferred tax related to temporary differences was determined based on an aggregate rate of 31%,
8.5%.
resulting from the sum of the general IRC rate (21%), the Municipal Surcharge of 1.5% and an average rate of State Surcharge of
8.5%.
741 321
771 854
771 854
-
-
As at 31 December 2021 the deferred tax related to temporary differences was determined based on an
aggregate rate of 31%, resulting from the sum of the general IRC rate (21%), the Municipal Surcharge of
1.5% and an average rate of State Surcharge of 8.5%.
On 4th September 2019, Law No. 98/2019 was published, which amended the IRC Code on the tax
treatment of credit institutions’ impairments, creating rules applicable to impairment losses recorded
in the tax periods beginning before 1st January 2019, not yet accepted for tax purposes. This Law
established a transition period for the above mentioned tax regime, which allows taxpayers in the five
tax periods beginning on or after January 1, 2019, to continue to apply the tax regime in force before
publication of this law, except if they perform the exercise of opt in until the end of October of each tax
period of the adaptation regime. Thus, on 31 December 2021, the Bank continued to apply Regulatory
Decree nº 13/2018, of December 28, which aims to extend, for tax purposes, the tax framework
resulting from Notice Noº 3/95 of Bank of Portugal.
The IRC payment declarations are subject to inspection and possible adjustment by the Tax Authorities
for a period of four years or during the period in which it is possible to deduct tax losses or tax credits
(up to a maximum of twelve years, depending on the year of determination). Thus, possible additional
tax assessments may take place due essentially to different interpretations of tax legislation. However,
Management believes that, in the context of the separate financial statements, there will be no
additional charges of significant value.
56
56
In 31 December 2021 and 2020, NOVO BANCO recorded deferred tax assets associated with
impairments not accepted for tax purposes for credit operations, which have already been written
off, considering the expectation that these will contribute to a taxable profit in the periods taxation in
which the conditions required for tax deductibility are met. As of December 31, 2021, the amounts held
by the Bank referring to these realities amount to approximately Euro 37 million.
373
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
On 4th September 2019, Law No. 98/2019 was published, which amended the IRC Code on the tax treatment of credit institutions'
impairments, creating rules applicable to impairment losses recorded in the tax periods beginning before 1st January 2019, not yet
On 4th September 2019, Law No. 98/2019 was published, which amended the IRC Code on the tax treatment of credit institutions'
accepted for tax purposes. This Law established a transition period for the above mentioned tax regime, which allows taxpayers in
impairments, creating rules applicable to impairment losses recorded in the tax periods beginning before 1st January 2019, not yet
the five tax periods beginning on or after January 1, 2019, to continue to apply the tax regime in force before publication of this law,
accepted for tax purposes. This Law established a transition period for the above mentioned tax regime, which allows taxpayers in
except if they perform the exercise of opt in until the end of October of each tax period of the adaptation regime. Thus, on 31 December
the five tax periods beginning on or after January 1, 2019, to continue to apply the tax regime in force before publication of this law,
2021, the Bank continued to apply Regulatory Decree nº 13/2018, of December 28, which aims to extend, for tax purposes, the tax
except if they perform the exercise of opt in until the end of October of each tax period of the adaptation regime. Thus, on 31 December
framework resulting from Notice Noº 3/95 of Bank of Portugal.
2021, the Bank continued to apply Regulatory Decree nº 13/2018, of December 28, which aims to extend, for tax purposes, the tax
framework resulting from Notice Noº 3/95 of Bank of Portugal.
The IRC payment declarations are subject to inspection and possible adjustment by the Tax Authorities for a period of four years or
during the period in which it is possible to deduct tax losses or tax credits (up to a maximum of twelve years, depending on the year
The IRC payment declarations are subject to inspection and possible adjustment by the Tax Authorities for a period of four years or
of determination). Thus, possible additional tax assessments may take place due essentially to different interpretations of tax
during the period in which it is possible to deduct tax losses or tax credits (up to a maximum of twelve years, depending on the year
legislation. However, Management believes that, in the context of the separate financial statements, there will be no additional charges
of determination). Thus, possible additional tax assessments may take place due essentially to different interpretations of tax
of significant value.
legislation. However, Management believes that, in the context of the separate financial statements, there will be no additional charges
of significant value.
In 31 December 2021 and 2020, NOVO BANCO recorded deferred tax assets associated with impairments not accepted for tax
purposes for credit operations, which have already been written off, considering the expectation that these will contribute to a taxable
In 31 December 2021 and 2020, NOVO BANCO recorded deferred tax assets associated with impairments not accepted for tax
profit in the periods taxation in which the conditions required for tax deductibility are met. As of December 31, 2021, the amounts held
purposes for credit operations, which have already been written off, considering the expectation that these will contribute to a taxable
by the Bank referring to these realities amount to approximately Euro 37 million.
profit in the periods taxation in which the conditions required for tax deductibility are met. As of December 31, 2021, the amounts held
by the Bank referring to these realities amount to approximately Euro 37 million.
The changes occurred in the deferred tax captions are as follows:
The changes occurred in the deferred tax captions are as follows:
The changes occurred in the deferred tax captions are as follows:
Balance at the beginning of the exercise
Recognised in Results for the exercise
Balance at the beginning of the exercise
Recognised in Fair value reserves
Recognised in Results for the exercise
Conversion of Deferred taxes into Tax credits
Recognised in Fair value reserves
Foreign exchange differences and other
Conversion of Deferred taxes into Tax credits
Foreign exchange differences and other
Balance at the end of the exercise (Assets / (Liabilities))
(in thousands of Euros)
31.12.2021
31.12.2020
(in thousands of Euros)
31.12.2021
771 854
28 292
771 854
58 913
28 292
( 124 721)
58 913
6 983
( 124 721)
741 321
6 983
31.12.2020
892 033
( 9 185)
892 033
( 2 544)
( 9 185)
( 107 705)
( 2 544)
( 745)
( 107 705)
771 854
( 745)
Balance at the end of the exercise (Assets / (Liabilities))
771 854
The current and deferred taxes recognized in the income statement and in reserves, in 2021 and 2020, had the following origins:
741 321
The current and deferred taxes recognized in the income statement and in reserves, in 2021 and 2020,
had the following origins:
The current and deferred taxes recognized in the income statement and in reserves, in 2021 and 2020, had the following origins:
Financial instruments
Impairment losses on loans and advances to customers
Financial instruments
Other tangible assets
Impairment losses on loans and advances to customers
Provisions
Other tangible assets
Pensions
Provisions
Other
Pensions
Tax losses carried forward
Other
Tax losses carried forward
Deferred taxes
Deferred taxes
Current taxes
Current taxes
Total tax recognised (income) / (expense)
Total tax recognised (income) / (expense)
(in thousands of Euros)
31.12.2021
31.12.2020
(in thousands of Euros)
Recognised in
the income
Recognised in
statement
the income
statement
31.12.2021
Recognised in
reserves
Recognised in
reserves
Recognised in
the income
Recognised in
statement
the income
statement
31.12.2020
Recognised in
reserves
Recognised in
reserves
( 27 975)
59 309
( 27 975)
( 174)
59 309
( 43 118)
( 174)
( 17 349)
( 43 118)
1 015
( 17 349)
-
1 015
-
( 28 292)
( 28 292)
4 249
4 249
( 24 043)
( 24 043)
( 59 271)
-
( 59 271)
-
-
-
-
-
-
-
-
-
-
-
( 59 271)
( 59 271)
-
-
( 59 271)
( 59 271)
( 11 363)
13 324
( 11 363)
( 174)
13 324
9 401
( 174)
( 2 004)
9 401
-
( 2 004)
-
-
-
9 184
9 184
( 13 400)
( 13 400)
( 4 216)
( 4 216)
The reconciliation of the corporate income tax rate, for the portion recognized in the income statement,
may be analyzed as follows:
4 787
-
4 787
-
-
-
-
( 2 243)
-
-
( 2 243)
-
-
-
2 544
2 544
-
-
2 544
2 544
57
57
374
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The reconciliation of the corporate income tax rate, for the portion recognized in the income statement, may be analyzed as follows:
(in thousands of Euros)
31.12.2021
31.12.2020
%
Value
%
Value
Income before tax
Tax rate of NOVO BANCO
Tax rate of novobanco
Income tax calculated based on the tax rate of novobanco
The reconciliation of the corporate income tax rate, for the portion recognized in the income statement, may be analyzed as follows:
(in thousands of Euros)
(1 378 462)
( 289 477)
201 865
42 392
21.0
21.0
Tax-exempt dividends
Impairment on investments in subsidiaries or associated companies not subject to Participation Exemption
Branch Tax and Tax Withheld Abroad
Rate differential in the generation / reversal of temporary differences
Income before tax
Tax rate of NOVO BANCO
Annulment of tax losses carried forward
Tax rate of novobanco
Impairments and provisions for credit
Income tax calculated based on the tax rate of novobanco
Impairments and fair value adjustments of securities
Provisions for other risks and charges and contingencies
Tax-exempt dividends
Deferred tax asset not recognized on tax loss for the year
Impairment on investments in subsidiaries or associated companies not subject to Participation Exemption
Pension Fund
Branch Tax and Tax Withheld Abroad
Extraordinary Contribution and Additional Solidarity over the Banking Sector
Rate differential in the generation / reversal of temporary differences
Others
Annulment of tax losses carried forward
Total tax recognized
Impairments and provisions for credit
Impairments and fair value adjustments of securities
Recoverability analysis of deferred tax assets
Provisions for other risks and charges and contingencies
Deferred tax asset not recognized on tax loss for the year
Pension Fund
Extraordinary Contribution and Additional Solidarity over the Banking Sector
Others
(0.8)
(20.4)
1.1
%
15.7
-
21.0
(26.4)
(18.7)
(7.8)
32.3
(5.0)
3.5
(6.4)
(0.8)
(20.4)
1.1
15.7
-
(26.4)
(18.7)
(7.8)
32.3
(5.0)
3.5
(6.4)
(11.9)
31.12.2021
31.12.2020
42 392
( 1 593)
( 41 203)
2 138
Value
31 650
201 865
-
( 53 201)
( 37 715)
( 15 830)
65 183
( 10 044)
7 019
( 12 839)
( 1 593)
( 41 203)
2 138
31 650
-
( 53 201)
( 37 715)
( 15 830)
65 183
( 10 044)
7 019
( 12 839)
( 24 043)
0.0
(2.9)
(0.2)
%
3.4
-
(10.7)
(7.6)
(1.6)
(1.2)
0.0
(0.5)
0.5
0.3
21.0
0.0
(2.9)
(0.2)
3.4
-
(10.7)
(7.6)
(1.6)
(1.2)
0.0
(0.5)
0.5
( 482)
40 166
2 902
Value
( 46 706)
(1 378 462)
-
147 255
104 665
21 988
15 913
( 324)
6 760
( 6 876)
( 289 477)
( 482)
40 166
2 902
( 46 706)
-
147 255
104 665
21 988
15 913
( 324)
6 760
( 6 876)
( 4 216)
Deferred tax assets are recognized to the extent they are expected to be recovered with future taxable income. The bank has
evaluated the recoverability of the deferred tax assets considering its expectations of future taxable profits until 2028. The
recoverability of deferred tax assets covered by the Special Regime applicable to Deferred Tax Assets is not dependent on the
generation of future taxable income.
Total tax recognized
( 24 043)
(11.9)
0.3
( 4 216)
Recoverability analysis of deferred tax assets
The assessment of the recoverability of deferred tax assets is carried out annually. On December 31, 2021, the exercise was
Recoverability analysis of deferred tax assets
performed based on the provisional version of the Medium Term Plan ("MTP") prepared for the period 2022-2024, preliminary
assessed by the General Supervisory Board in December 2021 and which, after final approval, will be referred to the European
Deferred tax assets are recognized to the extent they are expected to be recovered with future taxable income. The bank has
Central Bank in the end of March 2022.
evaluated the recoverability of the deferred tax assets considering its expectations of future taxable profits until 2028. The
recoverability of deferred tax assets covered by the Special Regime applicable to Deferred Tax Assets is not dependent on the
In the evaluation of the expectation of future taxable income generation in Portugal for the purposes of the above recovery exercise,
generation of future taxable income.
the following assumptions were also considered:
of economic activity, which is strongly affected by the current pandemic situation. The growth in
economic activity should also provide a return to commission levels to values similar to previous
fiscal years;
• Progressive recovery of interest rate benchmarks to positive levels;
Deferred tax assets are recognized to the extent they are expected to be recovered with future
taxable income. The bank has evaluated the recoverability of the deferred tax assets considering its
expectations of future taxable profits until 2028. The recoverability of deferred tax assets covered by
the Special Regime applicable to Deferred Tax Assets is not dependent on the generation of future
taxable income.
The assessment of the recoverability of deferred tax assets is carried out annually. On December 31,
2021, the exercise was performed based on the provisional version of the Medium Term Plan (“MTP”)
prepared for the period 2022-2024, preliminary assessed by the General Supervisory Board in
December 2021 and which, after final approval, will be referred to the European Central Bank in the end
of March 2022.
The assessment of the recoverability of deferred tax assets is carried out annually. On December 31, 2021, the exercise was
performed based on the provisional version of the Medium Term Plan ("MTP") prepared for the period 2022-2024, preliminary
assessed by the General Supervisory Board in December 2021 and which, after final approval, will be referred to the European
Central Bank in the end of March 2022.
In addition to the detailed estimates up to 2024, it is assumed, thereafter an increase in pre-tax results at a rate of 2.60%
from 2024;
Financial results moderate growth compensating the expected cost of debt issuing to meet MREL requirements as well as
the continued development of new lines of activity and the resumption of economic activity, which is strongly affected by the
current pandemic situation. The growth in economic activity should also provide a return to commission levels to values
similar to previous fiscal years;
• Operating costs reduction, based on specific cost reduction plans and the implementation of a new
distribution model, reflecting the favorable effect of the decrease in the number of employees and
branches and, generally, the simplification and increase in the efficiency of processes, focusing on
the digital component; and
In the evaluation of the expectation of future taxable income generation in Portugal for the purposes of the above recovery exercise,
the following assumptions were also considered:
Progressive recovery of interest rate benchmarks to positive levels;
Operating costs reduction, based on specific cost reduction plans and the implementation of a new distribution model,
In addition to the detailed estimates up to 2024, it is assumed, thereafter an increase in pre-tax results at a rate of 2.60%
reflecting the favorable effect of the decrease in the number of employees and branches and, generally, the simplification
from 2024;
and increase in the efficiency of processes, focusing on the digital component; and
Financial results moderate growth compensating the expected cost of debt issuing to meet MREL requirements as well as
Credit impairment charges in line with the evolution of the Bank's activity and supported by macroeconomic projections,
the continued development of new lines of activity and the resumption of economic activity, which is strongly affected by the
bearing in mind, in particular, the significant effort made in the last few years in the provisioning of the loan portfolio and the
current pandemic situation. The growth in economic activity should also provide a return to commission levels to values
progressive convergence towards gradually normalized risk costs.
similar to previous fiscal years;
• Credit impairment charges in line with the evolution of the Bank’s activity and supported by
macroeconomic projections, bearing in mind, in particular, the significant effort made in the last few
years in the provisioning of the loan portfolio and the progressive convergence towards gradually
normalized risk costs.
The evolution of the business plan used for this exercise is strongly conditioned by the evolution of the
Covid-19 pandemic situation, whose evolution is difficult to predict.
In the evaluation of the expectation of future taxable income generation in Portugal for the purposes
of the above recovery exercise, the following assumptions were also considered:
•
In addition to the detailed estimates up to 2024, it is assumed, thereafter an increase in pre-tax
results at a rate of 2.60% from 2024;
• Financial results moderate growth compensating the expected cost of debt issuing to meet MREL
requirements as well as the continued development of new lines of activity and the resumption
The evolution of the business plan used for this exercise is strongly conditioned by the evolution of the Covid-19 pandemic situation,
whose evolution is difficult to predict.
Progressive recovery of interest rate benchmarks to positive levels;
Operating costs reduction, based on specific cost reduction plans and the implementation of a new distribution model,
reflecting the favorable effect of the decrease in the number of employees and branches and, generally, the simplification
and increase in the efficiency of processes, focusing on the digital component; and
Depending on the analysis mentioned above, the amount of deferred taxes not recognized for tax losses, per year of expiry, is as
follows:
Credit impairment charges in line with the evolution of the Bank's activity and supported by macroeconomic projections,
bearing in mind, in particular, the significant effort made in the last few years in the provisioning of the loan portfolio and the
progressive convergence towards gradually normalized risk costs.
(in thousands of Euros)
Depending on the analysis mentioned above, the amount of deferred taxes not recognized for tax
losses, per year of expiry, is as follows:
The evolution of the business plan used for this exercise is strongly conditioned by the evolution of the Covid-19 pandemic situation,
whose evolution is difficult to predict.
Depending on the analysis mentioned above, the amount of deferred taxes not recognized for tax losses, per year of expiry, is as
follows:
2024-2026
2026 and forward
31.12.2021
31.12.2020
313 192
1 163 678
1 476 870
468 903
1 124 790
1 593 693
(in thousands of Euros)
In addition, during the financial year 2020, the Bank became aware of the Tax Authority’s position with regards to adjustments resulting
from the application of fair value to units in real estate investment funds and private equity funds. Such position implies that fair value
31.12.2021
31.12.2020
2024-2026
2026 and forward
313 192
1 163 678
1 476 870
58
468 903
1 124 790
1 593 693
In addition, during the financial year 2020, the Bank became aware of the Tax Authority’s position with regards to adjustments resulting
from the application of fair value to units in real estate investment funds and private equity funds. Such position implies that fair value
58
375
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
adjustments to units of real estate investment funds and private equity funds do not contribute to the taxable profit in the respective
year of booking. For the purpose of taxable income, such adjustments will only be accounted for at the moment of the respective
realization, namely upon sale of the participation units or liquidation of the funds. The overall amount of deferred tax assets relating
to these temporary differences, not recognized in the balance sheet, on December 31, 2021 amounts to 333.5 million euros.
Special Regime applicable to Deferred Tax Assets
During 2014, novobanco adhered to the Special Regime applicable to deferred tax assets, after a favourable decision of the
Shareholders General Meeting.
In addition, during the financial year 2020, the Bank became aware of the Tax Authority’s position with
regards to adjustments resulting from the application of fair value to units in real estate investment
funds and private equity funds. Such position implies that fair value adjustments to units of real estate
investment funds and private equity funds do not contribute to the taxable profit in the respective
year of booking. For the purpose of taxable income, such adjustments will only be accounted for at
the moment of the respective realization, namely upon sale of the participation units or liquidation
of the funds. The overall amount of deferred tax assets relating to these temporary differences, not
recognized in the balance sheet, on December 31, 2021 amounts to 333.5 million euros.
The changes to the mentioned above regime, introduced by Law No. 23/2016, of August 19, limited the temporal application of the
above-mentioned negative expenses and equity variations, accounted for in the tax periods beginning on or after 1January 2016, as
well as the associated deferred taxes. Thus, the deferred taxes covered by this special regime correspond only to expenses and
negative equity variations calculated up to 31 December 2015.
The Special Regime applicable to Deferred Tax Assets approved by Law No. 61/2014, of 26 August, covers deferred tax assets
resulting from non-deduction of expenses and negative equity changes related to impairment losses on credit and with post-
employment or long-term employee benefits.
The changes to the mentioned above regime, introduced by Law No. 23/2016, of August 19, limited the
temporal application of the above-mentioned negative expenses and equity variations, accounted for
in the tax periods beginning on or after 1January 2016, as well as the associated deferred taxes. Thus,
the deferred taxes covered by this special regime correspond only to expenses and negative equity
variations calculated up to 31 December 2015.
Deferred tax assets covered by the above-mentioned regime are convertible into tax credits when the
taxpayer records a negative net result in the respective tax period, or in case of liquidation by voluntary
dissolution or insolvency decreed by court decision.
Special Regime applicable to Deferred Tax Assets
Deferred tax assets covered by the above-mentioned regime are convertible into tax credits when the taxpayer records a negative
net result in the respective tax period, or in case of liquidation by voluntary dissolution or insolvency decreed by court decision.
During 2014, novobanco adhered to the Special Regime applicable to deferred tax assets, after a
favourable decision of the Shareholders General Meeting.
To convert to a tax credit (other than by liquidation or insolvency), a special reserve should be created for the amount of the respective
tax credit increased by 10%. The exercise of conversion rights results in the capital increase of the taxable person by incorporation
of the special reserve and issuance of new common shares. This special reserve may not be distributed.
The Special Regime applicable to Deferred Tax Assets approved by Law No. 61/2014, of 26 August,
covers deferred tax assets resulting from non-deduction of expenses and negative equity changes
related to impairment losses on credit and with post-employment or long-term employee benefits.
Following the determination of a negative net income for the years between 2016 and 2020, the
deferred tax assets converted or estimated to be converted by reference to the deferred tax assets
eligible at the balance sheet date are as follows:
Following the determination of a negative net income for the years between 2016 and 2020, the deferred tax assets converted or
estimated to be converted by reference to the deferred tax assets eligible at the balance sheet date are as follows:
To convert to a tax credit (other than by liquidation or insolvency), a special reserve should be created
for the amount of the respective tax credit increased by 10%. The exercise of conversion rights results
in the capital increase of the taxable person by incorporation of the special reserve and issuance of new
common shares. This special reserve may not be distributed.
Tax credit
124 721
110 922
161 974
127 575
99 474
2020
2019
2018
2017
2016
(in thousands of Euros)
As a result of Law No. 61/2014, the amount of deferred tax assets to be converted into a tax credit and the constitution of the special
reserve shall be subject to certification by a statutory auditor, as well as to confirmation by the Tax and Customs Authority, within the
scope of the review procedures for the assessment of the taxable income for the relevant tax periods.
As a result of Law No. 61/2014, the amount of deferred tax assets to be converted into a tax credit and
the constitution of the special reserve shall be subject to certification by a statutory auditor, as well as
to confirmation by the Tax and Customs Authority, within the scope of the review procedures for the
assessment of the taxable income for the relevant tax periods.
NOTE 28 – OTHER ASSETS
As at 31 December 2021 and 2020, the caption Other assets is analyzed as follows:
NOTE 28 – OTHER ASSETS
Collateral deposits placed
Derivative products
As at 31 December 2021 and 2020, the caption Other assets is analyzed as follows:
Collateral CLEARNET and VISA
Collateral deposits relating to reinsurance operations
Other collateral deposits
Recoverable government subsidies on mortgage loans
Public sector
Contingent Capital Agreement
Other debtors
Income receivable
Deferred costs
Precious metals, numismatics, medal collection and other liquid assets
Real estate properties a)
Equipment a)
Stock exchange transactions pending settlement
Other assets
Impairment losses
Real estate properties a)
Equipment a)
Other
Other debtors - Shareholder loans, supplementary capital contributions
a) Real estate properties and equipment received in settlement of loans and discontinued
(in thousands of Euros)
31.12.2021
31.12.2020
525 229
399 631
33 092
92 457
49
11 961
934 717
209 220
591 267
132 929
47 166
9 989
357 644
3 189
70 918
22 048
2 916 277
( 192 413)
( 2 180)
( 107 724)
( 58 108)
( 360 425)
2 555 852
806 215
655 952
33 092
117 127
45
6 527
683 882
598 312
553 668
61 212
51 569
9 677
500 917
3 488
60 917
54 689
3 391 073
( 267 438)
( 2 285)
( 109 538)
( 55 802)
( 435 063)
2 956 010
59
376
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
adjustments to units of real estate investment funds and private equity funds do not contribute to the taxable profit in the respective
year of booking. For the purpose of taxable income, such adjustments will only be accounted for at the moment of the respective
realization, namely upon sale of the participation units or liquidation of the funds. The overall amount of deferred tax assets relating
to these temporary differences, not recognized in the balance sheet, on December 31, 2021 amounts to 333.5 million euros.
Special Regime applicable to Deferred Tax Assets
During 2014, novobanco adhered to the Special Regime applicable to deferred tax assets, after a favourable decision of the
Shareholders General Meeting.
The Special Regime applicable to Deferred Tax Assets approved by Law No. 61/2014, of 26 August, covers deferred tax assets
resulting from non-deduction of expenses and negative equity changes related to impairment losses on credit and with post-
employment or long-term employee benefits.
The changes to the mentioned above regime, introduced by Law No. 23/2016, of August 19, limited the temporal application of the
above-mentioned negative expenses and equity variations, accounted for in the tax periods beginning on or after 1January 2016, as
well as the associated deferred taxes. Thus, the deferred taxes covered by this special regime correspond only to expenses and
negative equity variations calculated up to 31 December 2015.
Deferred tax assets covered by the above-mentioned regime are convertible into tax credits when the taxpayer records a negative
net result in the respective tax period, or in case of liquidation by voluntary dissolution or insolvency decreed by court decision.
To convert to a tax credit (other than by liquidation or insolvency), a special reserve should be created for the amount of the respective
tax credit increased by 10%. The exercise of conversion rights results in the capital increase of the taxable person by incorporation
of the special reserve and issuance of new common shares. This special reserve may not be distributed.
Following the determination of a negative net income for the years between 2016 and 2020, the deferred tax assets converted or
estimated to be converted by reference to the deferred tax assets eligible at the balance sheet date are as follows:
2020
2019
2018
2017
2016
(in thousands of Euros)
Tax credit
124 721
110 922
161 974
127 575
99 474
As a result of Law No. 61/2014, the amount of deferred tax assets to be converted into a tax credit and the constitution of the special
reserve shall be subject to certification by a statutory auditor, as well as to confirmation by the Tax and Customs Authority, within the
scope of the review procedures for the assessment of the taxable income for the relevant tax periods.
NOTE 28 – OTHER ASSETS
As at 31 December 2021 and 2020, the caption Other assets is analyzed as follows:
Collateral deposits placed
Derivative products
Collateral CLEARNET and VISA
Collateral deposits relating to reinsurance operations
Other collateral deposits
Recoverable government subsidies on mortgage loans
Public sector
Contingent Capital Agreement
Other debtors
Income receivable
Deferred costs
Precious metals, numismatics, medal collection and other liquid assets
Real estate properties a)
Equipment a)
Stock exchange transactions pending settlement
Other assets
Impairment losses
Real estate properties a)
Equipment a)
Other debtors - Shareholder loans, supplementary capital contributions
Other
a) Real estate properties and equipment received in settlement of loans and discontinued
(in thousands of Euros)
31.12.2021
31.12.2020
525 229
399 631
33 092
92 457
49
11 961
934 717
209 220
591 267
132 929
47 166
9 989
357 644
3 189
70 918
22 048
2 916 277
( 192 413)
( 2 180)
( 107 724)
( 58 108)
( 360 425)
2 555 852
806 215
655 952
33 092
117 127
45
6 527
683 882
598 312
553 668
61 212
51 569
9 677
500 917
3 488
60 917
54 689
3 391 073
( 267 438)
( 2 285)
( 109 538)
( 55 802)
( 435 063)
2 956 010
59
The caption Collateral deposits placed includes, amongst others, deposits made by the Bank as
collateral in order to celebrate certain derivative contracts on organized markets (margin accounts)
and on over the counter markets (Credit Support Annex – CSA). The CSAs take the form of collateral
agreements established between two parties negotiating Over-the-Counter derivatives with each
other, with the main objective of providing protection against credit risk, defining for that purpose rules
regarding collateral. Derivative transactions are regulated by the International Swaps and Derivatives
Association (ISDA) and have minimum risk margin that may change according to the ratings of the
parties.
As of 31 December 2021, the caption Other debtors includes, amongst others:
• Euro 111.6 million of shareholder loans and supplementary capital contributions resulting from the
assignment of loans and advances which are entirely provisioned (31 December 2020: Euro 111.6
million, entirely provisioned);
• Euro 60,5 million receivable relation to the sale operation of non-performing loans (Project NATA II)
(31 December 2020: Euro 67.0 million);
• Euro 1,1 million of receivables related to the property sale operation carried out in 2019 (called
“Project Sertorius”) (31 December 2020: Euro 21.8 million);
• Euro 4,2 million receivable in relation to the sale operation of non-performing loans in 2020
(denominated “Project Carter”). (December 31, 2020: Euro 27,4 million) (see Note 22);
• Euro 29.7 million of amounts receivable related to the transaction of sale of non-productive credits
carried out in 2021 (denominated “Wilkinson Project”) (see Note 22);
• Euro 50.0 million of receivables related to the sale of non-performing loans in 2021 (the “Orion
Project”) (see Note 22).
As at 31 December 2021, the caption Deferred costs includes the amount of Euro 36,855 thousand (31
December 2020: Euro 40,800 thousand) related to the difference between the nominal amount of the
loans and advances granted to bank employees under the Collective Labour Agreement (ACT) for the
banking sector and their respective fair value at grant date, calculated in accordance with IFRS 9. This
amount is charged to the income statement under staff costs over the lower of the remaining period
to the maturity of the loan granted and the estimated remaining years of service life of the employee.
The securities transactions to be settled reflect the transactions with securities, recorded on the trade
date, which were pending settlement, in accordance with the accounting policy described in Note 6.10.
377
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The caption Collateral deposits placed includes, amongst others, deposits made by the Bank as collateral in order to celebrate certain
derivative contracts on organized markets (margin accounts) and on over the counter markets (Credit Support Annex – CSA). The
CSAs take the form of collateral agreements established between two parties negotiating Over-the-Counter derivatives with each
other, with the main objective of providing protection against credit risk, defining for that purpose rules regarding collateral. Derivative
transactions are regulated by the International Swaps and Derivatives Association (ISDA) and have minimum risk margin that may
change according to the ratings of the parties.
As of 31 December 2021, the caption Other debtors includes, amongst others:
Euro 111.6 million of shareholder loans and supplementary capital contributions resulting from the assignment of loans and
advances which are entirely provisioned (31 December 2020: Euro 111.6 million, entirely provisioned),
Euro 60,5 million receivable relation to the sale operation of non-performing loans (Project NATA II) (31 December 2020: Euro
67.0 million);
2020: Euro 21.8 million);
Euro 1,1 million of receivables related to the property sale operation carried out in 2019 (called “Project Sertorius”) (31 December
Euro 4,2 million receivable in relation to the sale operation of non-performing loans in 2020 (denominated “Project Carter”).
Euro 29.7 million of amounts receivable related to the transaction of sale of non-productive credits carried out in 2021
(December 31, 2020: Euro 27,4 million) (see Note 22);
(denominated "Wilkinson Project") (see Note 22);
Euro 50.0 million of receivables related to the sale of non-performing loans in 2021 (the "Orion Project") (see Note 22).
As at 31 December 2021, the caption Deferred costs includes the amount of Euro 36,855 thousand (31 December 2020: Euro 40,800
thousand) related to the difference between the nominal amount of the loans and advances granted to bank employees under the
Collective Labour Agreement (ACT) for the banking sector and their respective fair value at grant date, calculated in accordance with
IFRS 9. This amount is charged to the income statement under staff costs over the lower of the remaining period to the maturity of
the loan granted and the estimated remaining years of service life of the employee.
The securities transactions to be settled reflect the transactions with securities, recorded on the trade date, which were pending
settlement, in accordance with the accounting policy described in Note 6.10.
The captions of Real estate properties and Equipment relate to foreclosed assets through the recovery of loans and advances and
to discontinued facilities, for which the Bank has the objective of immediate sale.
The captions of Real estate properties and Equipment relate to foreclosed assets through the recovery
of loans and advances and to discontinued facilities, for which the Bank has the objective of immediate
sale.
The bank implemented a plan aimed at the immediate sale of all real estate property recorded in Other assets, continuing its efforts
to meet the sales program established, of which we highlight the following (i) the existence of a web site specifically aimed at the sale
of real estate properties; (ii) the development and participation in real estate events both in Portugal and abroad; (iii) the establishment
of protocols with several real estate agents; and (iv) the regular sponsorship of auctions. Despite its intention to sell these assets, the
bank regularly requests the Bank of Portugal’s authorization, under article 114 of RGICSF, to extend the holding period for properties
acquired on repayment of own credit.
In the financial year of 2021, an impairment charge of Euro 4.2 million was recorded for the properties
in the portfolio (31 December 2020: Euro 41.3 million). Given the uncertainty associated with the
estimated value of these assets, novobanco considers the impacts of the current context of the
Covid-19 pandemic as the assets are revalued.
In the financial year of 2021, an impairment charge of Euro 4.2 million was recorded for the properties in the portfolio (31 December
2020: Euro 41.3 million). Given the uncertainty associated with the estimated value of these assets, novobanco considers the
impacts of the current context of the Covid-19 pandemic as the assets are revalued.
As described in accounting policy 6.25, the Bank evaluates at each reporting date, the recoverability
of these assets and assesses for signs of impairment, with impairment losses being recognized in the
income statement.
The bank implemented a plan aimed at the immediate sale of all real estate property recorded in
Other assets, continuing its efforts to meet the sales program established, of which we highlight the
following (i) the existence of a web site specifically aimed at the sale of real estate properties; (ii) the
development and participation in real estate events both in Portugal and abroad; (iii) the establishment
of protocols with several real estate agents; and (iv) the regular sponsorship of auctions. Despite its
intention to sell these assets, the bank regularly requests the Bank of Portugal’s authorization, under
article 114 of RGICSF, to extend the holding period for properties acquired on repayment of own credit.
The changes occurred in impairment losses are presented as follows:
As described in accounting policy 6.25, the Bank evaluates at each reporting date, the recoverability of these assets and assesses
for signs of impairment, with impairment losses being recognized in the income statement.
The changes occurred in impairment losses are presented as follows:
Balance at the beginning of the exercise
Allocation for the exercise
Utilisation during the exercise
Write-back for the exercise
Foreign exchange differences and other
Balance at the end of the exercise
The changes occurred in the real estate properties were as follows:
The changes occurred in the real estate properties were as follows:
Balance at the beginning of the exercise
Additions
Sales
Other movements (a)
Balance at the end of the exercise
(in thousands of Euros)
31.12.2021
31.12.2020
435 063
17 543
( 81 568)
( 13 857)
3 244
360 425
480 046
53 588
( 64 754)
( 11 427)
( 22 390)
435 063
(in thousands of Euros)
31.12.2021
31.12.2020
500 917
34 066
( 123 600)
( 53 739)
357 644
562 532
25 971
( 69 901)
60
( 17 685)
500 917
(a) Includes 50,208 thousand euros of real estate assets sold to the Group's Real Estate Funds, with an associated gain of 4.1 million euros.
As of 31 December 2021 and 2020, the detail of the real estate properties included in Other assets, by type, is as follows:
As of 31 December 2021 and 2020, the detail of the real estate properties included in Other assets, by
type, is as follows:
31.12.2021
Number of
properties
Gross value
Impairment
Net book value
(in thousands of Euros)
Fair value of
assets (b)
40 333
150 231
190 564
65 410
97 329
4 133
166 872
208
11 372
109 444
120 816
36 906
27 877
1 176
65 959
5 638
28 961
40 787
69 748
28 504
69 452
2 957
100 913
26 497
43 554
70 051
30 604
78 833
2 994
112 431
( 5 430)
( 5 430)
378
Land
Urban
Rural
Buildings constructed
Commercial
Residential
Others
Others (a)
Buildings constructed
Land
Urban
Rural
Commercial
Residential
Others
Others (a)
73
58
131
336
1 118
134
1 588
-
257
192
449
813
1 408
-
-
(a) the net book value in this item is negative due to the fact that costs with real estate sales are imputed
(b) Determined in accordance with accounting policy mentioned in Note 6.18
1 719
357 644
192 413
165 231
177 052
Number of
properties
Gross value
Impairment
Net book value
31.12.2020
(in thousands of Euros)
Fair value of
assets (b)
32 033
189 977
222 010
145 717
133 048
-
11 451
142 038
153 489
71 766
35 853
-
20 582
47 939
68 521
73 951
97 195
-
21 613
48 860
70 473
75 800
107 511
-
2 221
278 765
107 619
171 146
183 311
142
6 330
( 6 188)
( 6 188)
2 670
500 917
267 438
233 479
247 596
(a) the net book value in this item is negative due to the fact that costs with real estate sales are imputed
(b) Determined in accordance with accounting policy mentioned in Note 6.18
61
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The changes occurred in the real estate properties were as follows:
Balance at the beginning of the exercise
Additions
Sales
Other movements (a)
Balance at the end of the exercise
(in thousands of Euros)
31.12.2021
31.12.2020
500 917
34 066
( 123 600)
( 53 739)
357 644
562 532
25 971
( 69 901)
( 17 685)
500 917
(a) Includes 50,208 thousand euros of real estate assets sold to the Group's Real Estate Funds, with an associated gain of 4.1 million euros.
As of 31 December 2021 and 2020, the detail of the real estate properties included in Other assets, by type, is as follows:
Land
Urban
Rural
Buildings constructed
Commercial
Residential
Others
Others (a)
Number of
properties
Gross value
Impairment
Net book value
31.12.2021
(in thousands of Euros)
Fair value of
assets (b)
73
58
131
336
1 118
134
1 588
-
40 333
150 231
190 564
65 410
97 329
4 133
166 872
208
11 372
109 444
120 816
36 906
27 877
1 176
65 959
5 638
28 961
40 787
69 748
28 504
69 452
2 957
100 913
26 497
43 554
70 051
30 604
78 833
2 994
112 431
( 5 430)
( 5 430)
1 719
357 644
192 413
165 231
177 052
(a) the net book value in this item is negative due to the fact that costs with real estate sales are imputed
(b) Determined in accordance with accounting policy mentioned in Note 6.18
Land
Urban
Rural
Buildings constructed
Commercial
Residential
Others
Others (a)
Number of
properties
Gross value
Impairment
Net book value
31.12.2020
(in thousands of Euros)
Fair value of
assets (b)
257
192
449
813
1 408
-
2 221
-
32 033
189 977
222 010
145 717
133 048
-
278 765
11 451
142 038
153 489
71 766
35 853
-
107 619
20 582
47 939
68 521
73 951
97 195
-
171 146
21 613
48 860
70 473
75 800
107 511
-
183 311
142
6 330
( 6 188)
( 6 188)
2 670
500 917
267 438
233 479
247 596
(a) the net book value in this item is negative due to the fact that costs with real estate sales are imputed
(b) Determined in accordance with accounting policy mentioned in Note 6.18
The detail of real estate properties included in Other Assets, by ageing, is as follows:
379
61
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The detail of real estate properties included in Other Assets, by ageing, is as follows:
Land
Urban
Rural
Buildings constructed
Commercial
Residential
Other
Others (a)
31.12.2021
(in thousands of Euros)
Up to 1 year
1 to 2.5 years 2.5 to 5 years
More than 5
years
Total net book
value
15 945
14
15 959
1 309
3 492
6
4 807
92
71
163
2 562
4 721
2 509
9 792
5
( 5 435)
33
14 525
14 558
8 339
19 574
173
28 086
-
12 891
26 177
39 068
16 294
41 665
269
58 228
28 961
40 787
69 748
28 504
69 452
2 957
100 913
-
( 5 430)
20 771
4 520
42 644
97 296
165 231
(a) the net book value in this item is negative due to the fact that costs with real estate sales are imputed
Land
Urban
Rural
Buildings constructed
Commercial
Residential
Other
Others (a)
31.12.2020
(in thousands of Euros)
Up to 1 year
1 to 2.5 years 2.5 to 5 years
More than 5
years
Total net book
value
76
139
215
10 934
7 273
-
18 207
( 6 188)
2 110
2 730
4 840
19 978
15 558
-
35 536
-
10 565
15 370
25 935
23 163
26 024
-
49 187
-
7 831
29 700
37 531
19 876
48 340
-
68 216
20 582
47 939
68 521
73 951
97 195
-
171 146
-
( 6 188)
12 234
40 376
75 122
105 747
233 479
(a) the net book value in this item is negative due to the fact that costs with real estate sales are imputed
As at 31 December 2021, the amount related to discontinued facilities included in the caption Real estate properties amounts to Euro
9,848 thousand (31 December 2020: Euro 15,917 thousand), having the bank recorded impairment losses for these assets in the
total amount of Euro 4,863 thousand (31 December 2020: Euro 8,273 thousand).
As at 31 December 2021, the amount related to discontinued facilities included in the caption Real
estate properties amounts to Euro 9,848 thousand (31 December 2020: Euro 15,917 thousand), having
the bank recorded impairment losses for these assets in the total amount of Euro 4,863 thousand (31
December 2020: Euro 8,273 thousand).
NOTE 29 – NON-CURRENT ASSETS AND DISPOSAL GROUPS FOR SALE CLASSIFIED AS HELD FOR SALE AND
LIABILITIES INCLUDED IN DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE
This item on 31 December 2021 and 2020, is analyzed as follows:
Assets of discontinued operations
Banco Well Link (anterior NB Ásia)
Banco Delle Tre Venezie
ESEGUR
novobanco - Spain branch
Ijar Leasing Algerie
Others
Impairment losses
Banco Delle Tre Venezie
ESEGUR
novobanco - Spain branch
Ijar Leasing Algerie
Others
380
31.12.2021
(in thousands of Euros)
31.12.2020
Assets
Liabilities
Assets
Liabilities
2 039
-
-
-
12 597
50
14 686
-
-
-
( 8 035)
( 50)
( 8 085)
6 601
1 883
8 926
9 634
-
2 150
( 6 626)
( 4 460)
( 166 000)
-
( 2 150)
( 179 236)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
62
1 725 555
2 007 770
1 748 148
2 007 770
1 568 912
2 007 770
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The detail of real estate properties included in Other Assets, by ageing, is as follows:
Buildings constructed
Land
Urban
Rural
Commercial
Residential
Other
Others (a)
Buildings constructed
Land
Urban
Rural
Commercial
Residential
Other
Others (a)
31.12.2021
(in thousands of Euros)
Up to 1 year
1 to 2.5 years 2.5 to 5 years
More than 5
Total net book
years
value
15 945
14
15 959
1 309
3 492
6
4 807
92
71
163
2 562
4 721
2 509
9 792
12 891
26 177
39 068
16 294
41 665
269
58 228
28 961
40 787
69 748
28 504
69 452
2 957
100 913
5
( 5 435)
-
( 5 430)
20 771
4 520
42 644
97 296
165 231
31.12.2020
(in thousands of Euros)
Up to 1 year
1 to 2.5 years 2.5 to 5 years
More than 5
Total net book
years
value
33
14 525
14 558
8 339
19 574
173
28 086
-
10 565
15 370
25 935
23 163
26 024
-
-
7 831
29 700
37 531
19 876
48 340
-
-
20 582
47 939
68 521
73 951
97 195
-
( 6 188)
76
139
215
10 934
7 273
-
18 207
( 6 188)
2 110
2 730
4 840
19 978
15 558
-
-
35 536
49 187
68 216
171 146
(a) the net book value in this item is negative due to the fact that costs with real estate sales are imputed
(a) the net book value in this item is negative due to the fact that costs with real estate sales are imputed
12 234
40 376
75 122
105 747
233 479
As at 31 December 2021, the amount related to discontinued facilities included in the caption Real estate properties amounts to Euro
9,848 thousand (31 December 2020: Euro 15,917 thousand), having the bank recorded impairment losses for these assets in the
total amount of Euro 4,863 thousand (31 December 2020: Euro 8,273 thousand).
NOTE 29 – NON-CURRENT ASSETS AND DISPOSAL GROUPS FOR SALE CLASSIFIED AS HELD FOR SALE
NOTE 29 – NON-CURRENT ASSETS AND DISPOSAL GROUPS FOR SALE CLASSIFIED AS HELD FOR SALE AND
AND LIABILITIES INCLUDED IN DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE
LIABILITIES INCLUDED IN DISPOSAL GROUPS CLASSIFIED AS HELD FOR SALE
This item on 31 December 2021 and 2020, is analyzed as follows:
This item on 31 December 2021 and 2020, is analyzed as follows:
Assets of discontinued operations
Banco Well Link (anterior NB Ásia)
Banco Delle Tre Venezie
ESEGUR
novobanco - Spain branch
Ijar Leasing Algerie
Others
Impairment losses
Banco Delle Tre Venezie
ESEGUR
novobanco - Spain branch
Ijar Leasing Algerie
Others
31.12.2021
(in thousands of Euros)
31.12.2020
Assets
Liabilities
Assets
Liabilities
2 039
-
-
-
12 597
50
14 686
-
-
-
( 8 035)
( 50)
( 8 085)
6 601
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 883
8 926
9 634
1 725 555
-
2 150
1 748 148
( 6 626)
( 4 460)
( 166 000)
-
( 2 150)
( 179 236)
-
-
-
2 007 770
-
-
2 007 770
-
-
-
-
-
-
1 568 912
2 007 770
Other non-current assets held for sale include shareholdings and respective shareholder loans, which
were reclassified to this caption under IFRS 5.
Other non-current assets held for sale include shareholdings and respective shareholder loans, which were reclassified to this caption
under IFRS 5.
Other non-current assets held for sale include shareholdings and respective shareholder loans, which were reclassified to this caption
The impairment movement for non-current Assets for disposal classified as held for sale is as follow:
under IFRS 5.
The impairment movement for non-current Assets for disposal classified as held for sale is as follow:
62
The impairment movement for non-current Assets for disposal classified as held for sale is as follow:
31.12.2021
(in thousands of Euros)
31.12.2020
(in thousands of Euros)
Balance at the beginning of the exercise
Allocation / (reversals) for the exercise
Balance at the beginning of the exercise
Utilizations
Allocation / (reversals) for the exercise
Exchange differences and other
Utilizations
Balance at the end of the exercise
Exchange differences and other
As at 31 December 2021 and 2020, the results from discontinued operations is as follows:
As at 31 December 2021 and 2020, the results from discontinued operations is as follows:
Balance at the end of the exercise
As at 31 December 2021 and 2020, the results from discontinued operations is as follows:
Results from discontinued operations
Results from discontinued operations
novobanco - Spain branch
GNB Seguros
novobanco - Spain branch
GNB Seguros
31.12.2021
179 236
31.12.2020
8 776
10 000
179 236
( 164 954)
10 000
( 16 197)
( 164 954)
8 085
( 16 197)
8 085
170 460
8 776
-
170 460
-
-
179 236
-
179 236
(in thousands of Euros)
31.12.2021
31.12.2020
(in thousands of Euros)
31.12.2021
1 091
-
1 091
1 091
-
31.12.2020
( 40 623)
11 869
( 40 623)
( 28 754)
11 869
381
During 2021 the associate Ijar Leasing Algérie was transferred to non-current assets held for sale as it is in the process of selling
assets with a view to their disposal in the short term. The associates ESEGUR and Multipessoal were transferred from non-current
During 2021 the associate Ijar Leasing Algérie was transferred to non-current assets held for sale as it is in the process of selling
assets held for sale to investments in associates and the investment in Banco Delle Tre Venezie was transferred to assets at fair
assets with a view to their disposal in the short term. The associates ESEGUR and Multipessoal were transferred from non-current
value through other comprehensive income, as the sale processes are not active at financial year end.
assets held for sale to investments in associates and the investment in Banco Delle Tre Venezie was transferred to assets at fair
value through other comprehensive income, as the sale processes are not active at financial year end.
Spanish Branch
Following the accounting policy followed by the Bank, and in accordance with IFRS5 5 - Non-current assets held for sale and
Spanish Branch
discontinued operations, during 2020 the Bank transferred its activity in Spain to the caption Non-current assets and disposal groups
Following the accounting policy followed by the Bank, and in accordance with IFRS5 5 - Non-current assets held for sale and
classified as held for sale, as it is expected that its value will be recovered through a sale transaction and this is highly probable, and
1 091
( 28 754)
discontinued operations, during 2020 the Bank transferred its activity in Spain to the caption Non-current assets and disposal groups
the respective assets are in immediate sale conditions. The determination of fair value less costs of sale, carried out by an
classified as held for sale, as it is expected that its value will be recovered through a sale transaction and this is highly probable, and
independent external entity, took into consideration the amounts received from potential parties interested in partial sales of this
the respective assets are in immediate sale conditions. The determination of fair value less costs of sale, carried out by an
activity, the cost of sale of selected credit portfolios, and the cost of discontinuing the remaining residual activity, and resulted in a
independent external entity, took into consideration the amounts received from potential parties interested in partial sales of this
need for impairment of 166.0 million euros.
activity, the cost of sale of selected credit portfolios, and the cost of discontinuing the remaining residual activity, and resulted in a
need for impairment of 166.0 million euros.
On April 2, 2021, novobanco entered into an agreement to sell a number of assets and liabilities of the Spanish Branch with ABANCA
CORPORACIÓN BANCARIA, S.A, which was completed on November 30, 2021 with the derecognition of the assets and liabilities
On April 2, 2021, novobanco entered into an agreement to sell a number of assets and liabilities of the Spanish Branch with ABANCA
sold. The assets and liabilities excluded from this transaction, of residual value, remained in the branch's balance sheet, having
CORPORACIÓN BANCARIA, S.A, which was completed on November 30, 2021 with the derecognition of the assets and liabilities
integrated the consolidation perimeter of novobanco, as presented below:
sold. The assets and liabilities excluded from this transaction, of residual value, remained in the branch's balance sheet, having
(in thousands of Euros)
integrated the consolidation perimeter of novobanco, as presented below:
Sold Assets /
Liabilities
Sold Assets /
Liabilities
Assets / Liabilities
remaining in the
(in thousands of Euros)
Assets / Liabilities
Branch
remaining in the
Branch
Assets
Assets
Cash, cash balances at Central Banks and other demand deposits
Financial assets at fair value through profit or loss
Financial assets at amortized cost
Cash, cash balances at Central Banks and other demand deposits
Deposits
Financial assets at fair value through profit or loss
Investments in subsidiaries, joint ventures and associates
Financial assets at amortized cost
Current tax assets
Investments in subsidiaries, joint ventures and associates
Tax assets
Deposits
Deferred tax assets
Tax assets
Other assets
Current tax assets
Non-current assets and disposal groups classified as held for sale
Deferred tax assets
Non-current assets and disposal groups classified as held for sale
Resources from Central Banks and other credit institutions
Other liabilities
Resources from Central Banks and other credit institutions
Liabilities included in disposal groups classified as held for sale
Liabilities included in disposal groups classified as held for sale
Results attributable to shareholders of the parent company
Total Liabilities and Equity
Results attributable to shareholders of the parent company
Total Assets
Other assets
Liabilities
Total Assets
Provisions
Liabilities
Provisions
Total Liabilities
Other liabilities
Equity
Other reserves
Total Liabilities
Equity
Total Equity
Other reserves
Total Equity
Total Liabilities and Equity
The completion of this transaction had no impact on the income statement at the date of derecognition, since there was a provision
( 1 757 140)
89 650
recorded in the balance sheet for 176 million euros (of which 10 million euros reinforced already during 2021), which was partially
The completion of this transaction had no impact on the income statement at the date of derecognition, since there was a provision
recorded in the balance sheet for 176 million euros (of which 10 million euros reinforced already during 2021), which was partially
( 462 796)
( 462 796)
( 462 796)
( 462 796)
( 1 294 344)
( 1 757 140)
( 1 294 344)
( 1 757 140)
( 1 757 140)
( 1 757 140)
( 1 757 140)
( 1 757 140)
( 1 757 140)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5 000
2 751
33 794
5 000
33 794
2 751
604
33 794
37 910
33 794
11 929
604
25 981
37 910
9 591
11 929
-
25 981
89 650
9 591
-
33 885
89 650
6 611
28 259
33 885
-
6 611
68 755
28 259
-
19 804
68 755
1 091
20 895
19 804
89 650
1 091
20 895
63
63
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Other non-current assets held for sale include shareholdings and respective shareholder loans, which were reclassified to this caption
under IFRS 5.
The impairment movement for non-current Assets for disposal classified as held for sale is as follow:
Balance at the beginning of the exercise
Allocation / (reversals) for the exercise
Utilizations
Exchange differences and other
Balance at the end of the exercise
Results from discontinued operations
novobanco - Spain branch
GNB Seguros
As at 31 December 2021 and 2020, the results from discontinued operations is as follows:
(in thousands of Euros)
31.12.2021
31.12.2020
179 236
10 000
( 164 954)
( 16 197)
8 776
170 460
-
-
8 085
179 236
(in thousands of Euros)
31.12.2021
31.12.2020
1 091
-
( 40 623)
11 869
1 091
( 28 754)
During 2021 the associate Ijar Leasing Algérie was transferred to non-current assets held for sale as it is in the process of selling
assets with a view to their disposal in the short term. The associates ESEGUR and Multipessoal were transferred from non-current
assets held for sale to investments in associates and the investment in Banco Delle Tre Venezie was transferred to assets at fair
value through other comprehensive income, as the sale processes are not active at financial year end.
During 2021 the associate Ijar Leasing Algérie was transferred to non-current assets held for sale as it
is in the process of selling assets with a view to their disposal in the short term. The associates ESEGUR
and Multipessoal were transferred from non-current assets held for sale to investments in associates
and the investment in Banco Delle Tre Venezie was transferred to assets at fair value through other
comprehensive income, as the sale processes are not active at financial year end.
Spanish Branch
Following the accounting policy followed by the Bank, and in accordance with IFRS5 5 - Non-current assets held for sale and
discontinued operations, during 2020 the Bank transferred its activity in Spain to the caption Non-current assets and disposal groups
classified as held for sale, as it is expected that its value will be recovered through a sale transaction and this is highly probable, and
the respective assets are in immediate sale conditions. The determination of fair value less costs of sale, carried out by an
independent external entity, took into consideration the amounts received from potential parties interested in partial sales of this
activity, the cost of sale of selected credit portfolios, and the cost of discontinuing the remaining residual activity, and resulted in a
need for impairment of 166.0 million euros.
assets are in immediate sale conditions. The determination of fair value less costs of sale, carried out
by an independent external entity, took into consideration the amounts received from potential parties
interested in partial sales of this activity, the cost of sale of selected credit portfolios, and the cost
of discontinuing the remaining residual activity, and resulted in a need for impairment of 166.0 million
euros.
Spanish Branch
Following the accounting policy followed by the Bank, and in accordance with IFRS5 5 - Non-current
assets held for sale and discontinued operations, during 2020 the Bank transferred its activity in Spain
to the caption Non-current assets and disposal groups classified as held for sale, as it is expected that
its value will be recovered through a sale transaction and this is highly probable, and the respective
On April 2, 2021, novobanco entered into an agreement to sell a number of assets and liabilities of the Spanish Branch with ABANCA
CORPORACIÓN BANCARIA, S.A, which was completed on November 30, 2021 with the derecognition of the assets and liabilities
sold. The assets and liabilities excluded from this transaction, of residual value, remained in the branch's balance sheet, having
integrated the consolidation perimeter of novobanco, as presented below:
On April 2, 2021, novobanco entered into an agreement to sell a number of assets and liabilities of the
Spanish Branch with ABANCA CORPORACIÓN BANCARIA, S.A, which was completed on November
30, 2021 with the derecognition of the assets and liabilities sold. The assets and liabilities excluded
from this transaction, of residual value, remained in the branch’s balance sheet, having integrated the
consolidation perimeter of novobanco, as presented below:
Assets
Cash, cash balances at Central Banks and other demand deposits
Financial assets at fair value through profit or loss
Financial assets at amortized cost
Deposits
Investments in subsidiaries, joint ventures and associates
Tax assets
Current tax assets
Deferred tax assets
Other assets
Non-current assets and disposal groups classified as held for sale
Total Assets
Liabilities
Resources from Central Banks and other credit institutions
Provisions
Other liabilities
Liabilities included in disposal groups classified as held for sale
Total Liabilities
Equity
Other reserves
Results attributable to shareholders of the parent company
Total Equity
Total Liabilities and Equity
Sold Assets /
Liabilities
(in thousands of Euros)
Assets / Liabilities
remaining in the
Branch
-
-
( 462 796)
( 462 796)
-
-
-
-
-
( 1 294 344)
( 1 757 140)
-
-
-
( 1 757 140)
( 1 757 140)
-
-
-
( 1 757 140)
5 000
2 751
33 794
33 794
604
37 910
11 929
25 981
9 591
-
89 650
33 885
6 611
28 259
-
68 755
19 804
1 091
20 895
89 650
The completion of this transaction had no impact on the income statement at the date of derecognition, since there was a provision
recorded in the balance sheet for 176 million euros (of which 10 million euros reinforced already during 2021), which was partially
The completion of this transaction had no impact on the income statement at the date of derecognition,
since there was a provision recorded in the balance sheet for 176 million euros (of which 10 million euros
reinforced already during 2021), which was partially used. The remaining amount of 15.2 million euros
was transferred to Provisions for other contingencies related to this transaction (advisory costs, tax
contingencies and other possible claims).
63
382
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
used. The remaining amount of 15.2 million euros was transferred to Provisions for other contingencies related to this transaction
used. The remaining amount of 15.2 million euros was transferred to Provisions for other contingencies related to this transaction
(advisory costs, tax contingencies and other possible claims).
(advisory costs, tax contingencies and other possible claims).
NOTE 30 – FINANCIAL LIABILITIES MEASURED AT AMORTISED COST
This caption as at 31 December 2021 and 2020 is analyzed as follows:
This caption as at 31 December 2021 and 2020 is analyzed as follows:
This caption as at 31 December 2021 and 2020 is analyzed as follows:
NOTE 30 – FINANCIAL LIABILITIES MEASURED AT AMORTISED COST
NOTE 30 – FINANCIAL LIABILITIES MEASURED AT AMORTISED COST
Deposits from Central Banks and Other credit institutions
Deposits from Central Banks and Other credit institutions
Due to customers
Due to customers
Debt securities issued, subordinated debt and liabilities associated to transferred assets
Debt securities issued, subordinated debt and liabilities associated to transferred assets
Other financial liabilities
Other financial liabilities
Deposits from Central Banks and other credit institutions
Deposits from Central Banks and other credit institutions
(in thousands of Euros)
(in thousands of Euros)
31.12.2021
31.12.2021
31.12.2020
31.12.2020
11 497 829
11 497 829
26 997 858
26 997 858
1 479 066
1 479 066
371 609
371 609
10 778 468
10 778 468
25 778 507
25 778 507
974 996
974 996
364 013
364 013
40 346 362
40 346 362
37 895 984
37 895 984
Deposits from Central Banks and other credit institutions
The balance of Deposits from Central Banks and other credit institutions is composed, as to its nature,
as follows:
The balance of Deposits from Central Banks and other credit institutions is composed, as to its nature, as follows:
The balance of Deposits from Central Banks and other credit institutions is composed, as to its nature, as follows:
Deposits from Central Banks
Deposits from Central Banks
From the European System of Central Banks
From the European System of Central Banks
Deposits
Deposits
Other funds
Other funds
Deposits from Other credit institutions
Deposits from Other credit institutions
Domestic
Domestic
Deposits
Deposits
Other funds
Other funds
Foreign
Foreign
Deposits
Deposits
Loans
Loans
Operations with repurchase agreements
Operations with repurchase agreements
Other resources
Other resources
(in thousands of Euros)
(in thousands of Euros)
31.12.2021
31.12.2021
31.12.2020
31.12.2020
53 126
53 126
7 954 000
7 954 000
8 007 126
8 007 126
29 030
29 030
7 004 000
7 004 000
7 033 030
7 033 030
968 975
968 975
24 534
24 534
993 509
993 509
426 711
426 711
531 973
531 973
1 529 847
1 529 847
8 663
8 663
2 497 194
2 497 194
3 490 703
3 490 703
11 497 829
11 497 829
889 876
889 876
4 792
4 792
894 668
894 668
624 873
624 873
596 534
596 534
1 625 724
1 625 724
3 639
3 639
2 850 770
2 850 770
3 745 438
3 745 438
10 778 468
10 778 468
As at 31 December 2021, the caption funds from the European System of Central Banks includes Euro 7
954 million covered by Bank financial assets pledged as collateral, as part of the third series of longer-
term refinancing operations of the European Central Bank (TLTRO III) (31 December 2020: Euro 7 004
million). The bonus introduced by the ECB in the interest rate of these transactions, in accordance
with the provisions of IAS 20, is being deducted from financing costs on a linear basis for accounting
purposes, taking into account the Bank’s expectation of complying with the eligibility requirements set
by the ECB.
As at 31 December 2021, the caption funds from the European System of Central Banks includes Euro 7 954 million covered by
As at 31 December 2021, the caption funds from the European System of Central Banks includes Euro 7 954 million covered by
Bank financial assets pledged as collateral, as part of the third series of longer-term refinancing operations of the European Central
Bank financial assets pledged as collateral, as part of the third series of longer-term refinancing operations of the European Central
Bank (TLTRO III) (31 December 2020: Euro 7 004 million). The bonus introduced by the ECB in the interest rate of these
Bank (TLTRO III) (31 December 2020: Euro 7 004 million). The bonus introduced by the ECB in the interest rate of these
transactions, in accordance with the provisions of IAS 20, is being deducted from financing costs on a linear basis for accounting
transactions, in accordance with the provisions of IAS 20, is being deducted from financing costs on a linear basis for accounting
purposes, taking into account the Bank's expectation of complying with the eligibility requirements set by the ECB.
purposes, taking into account the Bank's expectation of complying with the eligibility requirements set by the ECB.
The balance of the caption Repurchase agreements operations corresponds to the sale of securities
with purchasing agreement (repos), recorded in accordance with the accounting policy mentioned in
Note 6.21.
The balance of the caption Repurchase agreements operations corresponds to the sale of securities with purchasing agreement
The balance of the caption Repurchase agreements operations corresponds to the sale of securities with purchasing agreement
(repos), recorded in accordance with the accounting policy mentioned in Note 6.21.
(repos), recorded in accordance with the accounting policy mentioned in Note 6.21.
The breakdown of Resources of Central Banks and other credit institutions, by residual maturity, as at
31 December 2021 and 2020, is as follows:
383
64
64
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The breakdown of Resources of Central Banks and other credit institutions, by residual maturity, as at 31 December 2021 and
2020, is as follows:
The breakdown of Resources of Central Banks and other credit institutions, by residual maturity, as at 31 December 2021 and
(in thousands of Euros)
The breakdown of Resources of Central Banks and other credit institutions, by residual maturity, as at 31 December 2021 and
2020, is as follows:
2020, is as follows:
31.12.2021
Deposits from Central Banks
Up to 3 months
From 3 months to 1 year
Deposits from Central Banks
Deposits from Central Banks
From 1 to 5 years
Up to 3 months
Up to 3 months
From 3 months to 1 year
From 3 months to 1 year
From 1 to 5 years
From 1 to 5 years
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
Up to 3 months
Up to 3 months
More than 5 years
From 3 months to 1 year
From 3 months to 1 year
From 1 to 5 years
From 1 to 5 years
More than 5 years
More than 5 years
Deposits from Other Credit Institutions
Deposits from Other Credit Institutions
Deposits from Other Credit Institutions
The analysis of repurchase agreements operations, by residual maturity, is as follows:
31.12.2020
(in thousands of Euros)
(in thousands of Euros)
31.12.2020
31.12.2020
29 030
-
7 004 000
29 030
29 030
7 033 030
-
-
7 004 000
7 004 000
7 033 030
1 420 031
7 033 030
666 868
1 087 233
1 420 031
1 420 031
571 306
666 868
666 868
3 745 438
1 087 233
1 087 233
571 306
10 778 468
571 306
3 745 438
3 745 438
10 778 468
10 778 468
(in thousands of Euros)
31.12.2020
(in thousands of Euros)
(in thousands of Euros)
31.12.2020
31.12.2020
225 507
350 014
1 050 203
225 507
225 507
350 014
1 625 724
350 014
1 050 203
1 050 203
1 625 724
1 625 724
31.12.2021
31.12.2021
53 126
1 627 000
6 327 000
53 126
53 126
8 007 126
1 627 000
1 627 000
6 327 000
6 327 000
8 007 126
1 487 742
8 007 126
1 287 514
181 609
1 487 742
1 487 742
533 838
1 287 514
1 287 514
3 490 703
181 609
181 609
533 838
11 497 829
533 838
3 490 703
3 490 703
11 497 829
11 497 829
31.12.2021
31.12.2021
679 782
850 065
-
679 782
679 782
850 065
1 529 847
850 065
-
-
1 529 847
1 529 847
Foreign
Foreign
Foreign
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
Up to 3 months
Up to 3 months
From 3 months to 1 year
From 3 months to 1 year
From 1 to 5 years
From 1 to 5 years
Due to customers
The analysis of repurchase agreements operations, by residual maturity, is as follows:
The analysis of repurchase agreements operations, by residual maturity, is as follows:
The analysis of repurchase agreements operations, by residual maturity, is as follows:
31.12.2021
Due to customers
The balance of Deposits due to costumers is composed, as to its nature, as follows:
The balance of Deposits due to costumers is composed, as to its nature, as follows:
Due to customers
Due to customers
The balance of Deposits due to costumers is composed, as to its nature, as follows:
The balance of Deposits due to costumers is composed, as to its nature, as follows:
Repayable on demand
Demand deposits
Repayable on demand
Repayable on demand
Time deposits
Demand deposits
Demand deposits
Time deposits
Other
Time deposits
Time deposits
Time deposits
Time deposits
Savings accounts
Other
Other
Retirement saving accounts
Other
Savings accounts
Savings accounts
Retirement saving accounts
Retirement saving accounts
Other funds
Other
Other
Other
Other funds
Other funds
Other
Other
31.12.2021
31.12.2021
31.12.2021
12 388 794
(in thousands of Euros)
31.12.2020
(in thousands of Euros)
(in thousands of Euros)
31.12.2020
31.12.2020
11 475 826
12 388 794
12 388 794
9 011 648
180
9 011 828
9 011 648
9 011 648
180
180
226 003
9 011 828
9 011 828
5 125 652
5 351 655
226 003
226 003
5 125 652
5 125 652
245 581
5 351 655
5 351 655
245 581
245 581
26 997 858
245 581
245 581
245 581
26 997 858
26 997 858
11 475 826
11 475 826
9 187 317
241
9 187 558
9 187 317
9 187 317
241
241
232 741
9 187 558
9 187 558
4 673 474
4 906 215
232 741
232 741
4 673 474
4 673 474
208 908
4 906 215
4 906 215
208 908
208 908
25 778 507
208 908
208 908
208 908
25 778 507
25 778 507
384
65
65
65
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
As at 31 December 2021 and 2020, the schedule of Due to customers, by residual maturity periods, is
as follows:
As at 31 December 2021 and 2020, the schedule of Due to customers, by residual maturity periods, is as follows:
As at 31 December 2021 and 2020, the schedule of Due to customers, by residual maturity periods, is as follows:
As at 31 December 2021 and 2020, the schedule of Due to customers, by residual maturity periods, is as follows:
Debt Securities issued, Subordinated Debt and Financial liabilities associated to transferred assets
Debt Securities issued, Subordinated Debt and Financial liabilities associated to transferred
assets
This caption breaks down as follows:
Debt Securities issued, Subordinated Debt and Financial liabilities associated to transferred assets
This caption breaks down as follows:
Debt Securities issued, Subordinated Debt and Financial liabilities associated to transferred assets
This caption breaks down as follows:
Repayable on demand
Repayable on demand
Term deposits
Term deposits
Repayable on demand
Term deposits
Up to 3 months
From 3 months to 1 year
Up to 3 months
From 1 to 5 years
From 3 months to 1 year
Up to 3 months
More than 5 years
From 1 to 5 years
From 3 months to 1 year
More than 5 years
From 1 to 5 years
More than 5 years
This caption breaks down as follows:
Debt securities issued
Debt securities issued
Debt securities issued
Euro Medium Term Notes (EMTN)
Bonds
Euro Medium Term Notes (EMTN)
Bonds
Euro Medium Term Notes (EMTN)
Bonds
Bonds
Subordinated debt
Subordinated debt
Financial liabilities associated to transferred assets
Subordinated debt
Financial liabilities associated to transferred assets
Bonds
Asset lending operations
Bonds
Asset lending operations
Financial liabilities associated to transferred assets
(in thousands of Euros)
31.12.2021
31.12.2020
(in thousands of Euros)
31.12.2021
12 388 794
31.12.2020
(in thousands of Euros)
11 475 826
31.12.2021
12 388 794
7 670 678
12 388 794
5 607 590
7 670 678
1 290 725
5 607 590
7 670 678
40 071
1 290 725
5 607 590
14 609 064
40 071
1 290 725
26 997 858
14 609 064
40 071
14 609 064
26 997 858
26 997 858
31.12.2020
11 475 826
7 124 178
11 475 826
5 561 554
7 124 178
1 576 564
5 561 554
7 124 178
40 385
1 576 564
5 561 554
14 302 681
40 385
1 576 564
25 778 507
14 302 681
40 385
14 302 681
25 778 507
25 778 507
(in thousands of Euros)
31.12.2021
(in thousands of Euros)
31.12.2020
31.12.2021
(in thousands of Euros)
31.12.2020
31.12.2021
445 633
573 588
445 633
1 019 221
573 588
445 633
1 019 221
573 588
415 394
1 019 221
415 394
44 451
415 394
1 479 066
44 451
31.12.2020
515 311
-
515 311
515 311
-
515 311
515 311
-
415 234
515 311
415 234
44 451
415 234
974 996
44 451
Asset lending operations
974 996
44 451
Under the Covered Bonds Program (“Programa de Emissão de Obrigações Hipotecárias”), which has a maximum amount of Euro
974 996
10,000 million, the Bank issued covered bonds which amount to Euro 5,500 million (31 December 2020: Euro 5,500 million), being
Under the Covered Bonds Program (“Programa de Emissão de Obrigações Hipotecárias”), which has a maximum amount of Euro
these covered bonds totally repurchased by the Bank. The main characteristics of the outstanding issues as of 31 December 2021
10,000 million, the Bank issued covered bonds which amount to Euro 5,500 million (31 December 2020: Euro 5,500 million), being
and 2020 are as follows:
Under the Covered Bonds Program (“Programa de Emissão de Obrigações Hipotecárias”), which has a maximum amount of Euro
Under the Covered Bonds Program (“Programa de Emissão de Obrigações Hipotecárias”), which has a
these covered bonds totally repurchased by the Bank. The main characteristics of the outstanding issues as of 31 December 2021
10,000 million, the Bank issued covered bonds which amount to Euro 5,500 million (31 December 2020: Euro 5,500 million), being
(in thousands of Euros)
maximum amount of Euro 10,000 million, the Bank issued covered bonds which amount to Euro 5,500
and 2020 are as follows:
these covered bonds totally repurchased by the Bank. The main characteristics of the outstanding issues as of 31 December 2021
31.12.2021
million (31 December 2020: Euro 5,500 million), being these covered bonds totally repurchased by
(in thousands of Euros)
and 2020 are as follows:
1 479 066
44 451
1 479 066
the Bank. The main characteristics of the outstanding issues as of 31 December 2021 and 2020 are as
follows
Designation
Designation
NB 2015 SR.1
Designation
NB 2015 SR.2
NB 2015 SR.1
NB 2015 SR.3
NB 2015 SR.2
NB 2015 SR.4
NB 2015 SR.1
NB 2015 SR.3
NB 2015 SR.5
NB 2015 SR.2
NB 2015 SR.4
NB 2019 SR.6
NB 2015 SR.3
NB 2015 SR.5
NB 2019 SR.7
NB 2015 SR.4
NB 2019 SR.6
NB 2015 SR.5
NB 2019 SR.7
NB 2019 SR.6
NB 2019 SR.7
Designation
Designation
NB 2015 SR.1
Designation
NB 2015 SR.2
NB 2015 SR.1
NB 2015 SR.3
NB 2015 SR.2
NB 2015 SR.4
NB 2015 SR.1
NB 2015 SR.3
NB 2015 SR.5
NB 2015 SR.2
NB 2015 SR.4
NB 2019 SR.6
NB 2015 SR.3
NB 2015 SR.5
NB 2019 SR.7
NB 2015 SR.4
NB 2019 SR.6
NB 2015 SR.5
NB 2019 SR.7
NB 2019 SR.6
NB 2019 SR.7
Nominal value
(in thousands
Nominal value
of Euros)
(in thousands
Nominal value
1 000 000
of Euros)
(in thousands
1 000 000
of Euros)
1 000 000
1 000 000
1 000 000
700 000
1 000 000
1 000 000
500 000
1 000 000
700 000
750 000
1 000 000
500 000
550 000
700 000
750 000
5 500 000
500 000
550 000
750 000
5 500 000
550 000
Carrying book
value (in
Carrying book
thousands of
value (in
Euros)
Carrying book
thousands of
-
value (in
Euros)
-
thousands of
-
-
Euros)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5 500 000
-
Nominal value
(in thousands
Nominal value
of Euros)
(in thousands
Nominal value
of Euros)
1 000 000
(in thousands
1 000 000
of Euros)
1 000 000
1 000 000
Carrying book
value (in
Carrying book
thousands of
value (in
Euros)
Carrying book
thousands of
-
value (in
Euros)
-
thousands of
Euros)
1 000 000
700 000
1 000 000
1 000 000
500 000
1 000 000
700 000
750 000
1 000 000
500 000
550 000
700 000
750 000
5 500 000
500 000
550 000
750 000
5 500 000
550 000
5 500 000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31.12.2021
Issue date
Maturity date
31.12.2021
Issue date
07/10/2015
Issue date
07/10/2015
07/10/2015
07/10/2015
07/10/2015
07/10/2015
07/10/2015
07/10/2015
22/12/2016
07/10/2015
07/10/2015
10/12/2019
07/10/2015
22/12/2016
10/12/2019
07/10/2015
10/12/2019
22/12/2016
10/12/2019
10/12/2019
10/12/2019
Maturity date
07/10/2025
Maturity date
07/10/2024
07/10/2025
07/10/2027
07/10/2024
07/10/2022
07/10/2025
07/10/2027
22/12/2023
07/10/2024
07/10/2022
10/06/2023
07/10/2027
22/12/2023
10/12/2024
07/10/2022
10/06/2023
22/12/2023
10/12/2024
10/06/2023
10/12/2024
31.12.2020
31.12.2020
Issue date
Maturity date
31.12.2020
Issue date
07/10/2015
Issue date
07/10/2015
07/10/2015
07/10/2015
07/10/2015
07/10/2015
07/10/2015
07/10/2015
22/12/2016
07/10/2015
07/10/2015
10/12/2019
07/10/2015
22/12/2016
10/12/2019
07/10/2015
10/12/2019
22/12/2016
10/12/2019
10/12/2019
10/12/2019
Maturity date
07/10/2021
Maturity date
07/10/2024
07/10/2021
07/10/2020
07/10/2024
07/10/2022
07/10/2021
07/10/2020
22/12/2023
07/10/2024
07/10/2022
10/06/2023
07/10/2020
22/12/2023
10/12/2024
07/10/2022
10/06/2023
22/12/2023
10/12/2024
10/06/2023
10/12/2024
Interest
payment
Interest
payment
Quarterly
Interest
Quarterly
payment
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Interest
payment
Interest
payment
Quarterly
Interest
Quarterly
payment
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Interest Rate
Interest Rate
Euribor 3 Months + 0.25%
Interest Rate
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Interest Rate
Interest Rate
Euribor 3 Months + 0.25%
Interest Rate
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Market
Market
XDUB
Market
XDUB
XDUB
XDUB
XDUB
XDUB
XDUB
XDUB
XDUB
XDUB
XDUB
XMSM
XDUB
XDUB
XMSM
XDUB
XMSM
XDUB
XMSM
XMSM
XMSM
Market
Market
XDUB
Market
XDUB
XDUB
XDUB
XDUB
XDUB
XDUB
XDUB
XDUB
XDUB
XDUB
XMSM
XDUB
XDUB
XMSM
XDUB
XMSM
XDUB
XMSM
XMSM
XMSM
Rating
(in thousands of Euros)
Moody's
Rating
DBRS
Rating
A2
Moody's
A2
Moody's
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A
DBRS
A
DBRS
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
(in thousands of Euros)
385
(in thousands of Euros)
Rating
(in thousands of Euros)
Moody's
Rating
DBRS
Rating
A2
Moody's
A2
Moody's
A
DBRS
A
DBRS
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A2
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
66
66
66
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
As at 31 December 2021 and 2020, the schedule of Due to customers, by residual maturity periods, is as follows:
Debt Securities issued, Subordinated Debt and Financial liabilities associated to transferred assets
This caption breaks down as follows:
Repayable on demand
Term deposits
Up to 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
Debt securities issued
Euro Medium Term Notes (EMTN)
Bonds
Subordinated debt
Bonds
Financial liabilities associated to transferred assets
Asset lending operations
(in thousands of Euros)
31.12.2021
31.12.2020
12 388 794
11 475 826
7 670 678
5 607 590
1 290 725
40 071
7 124 178
5 561 554
1 576 564
40 385
14 609 064
14 302 681
26 997 858
25 778 507
(in thousands of Euros)
31.12.2021
31.12.2020
445 633
573 588
1 019 221
515 311
-
515 311
415 394
415 234
44 451
1 479 066
44 451
974 996
Under the Covered Bonds Program (“Programa de Emissão de Obrigações Hipotecárias”), which has a maximum amount of Euro
10,000 million, the Bank issued covered bonds which amount to Euro 5,500 million (31 December 2020: Euro 5,500 million), being
these covered bonds totally repurchased by the Bank. The main characteristics of the outstanding issues as of 31 December 2021
and 2020 are as follows:
Designation
Issue date
Maturity date
Interest Rate
Market
Nominal value
(in thousands
of Euros)
Carrying book
value (in
thousands of
Euros)
31.12.2021
NB 2015 SR.1
NB 2015 SR.2
NB 2015 SR.3
NB 2015 SR.4
NB 2015 SR.5
NB 2019 SR.6
NB 2019 SR.7
1 000 000
1 000 000
1 000 000
700 000
500 000
750 000
550 000
5 500 000
07/10/2015
07/10/2015
07/10/2015
07/10/2015
22/12/2016
10/12/2019
10/12/2019
07/10/2025
07/10/2024
07/10/2027
07/10/2022
22/12/2023
10/06/2023
10/12/2024
-
-
-
-
-
-
-
-
Designation
NB 2015 SR.1
NB 2015 SR.2
NB 2015 SR.3
NB 2015 SR.4
NB 2015 SR.5
NB 2019 SR.6
NB 2019 SR.7
Nominal value
(in thousands
of Euros)
Carrying book
value (in
thousands of
Euros)
31.12.2020
Issue date
Maturity date
1 000 000
1 000 000
1 000 000
700 000
500 000
750 000
550 000
5 500 000
07/10/2015
07/10/2015
07/10/2015
07/10/2015
22/12/2016
10/12/2019
10/12/2019
07/10/2021
07/10/2024
07/10/2020
07/10/2022
22/12/2023
10/06/2023
10/12/2024
-
-
-
-
-
-
-
-
Interest
payment
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Interest
payment
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
Quarterly
(in thousands of Euros)
Rating
Moody's
DBRS
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
XDUB
XDUB
XDUB
XDUB
XDUB
XMSM
XMSM
A2
A2
A2
A2
A2
A2
A2
A
A
A
A
A
A
A
Interest Rate
Market
(in thousands of Euros)
Rating
Moody's
DBRS
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
Euribor 3 Months + 0.25%
XDUB
XDUB
XDUB
XDUB
XDUB
XMSM
XMSM
A2
A2
A2
A2
A2
A2
A2
A
A
A
A
A
A
A
These covered bonds are guaranteed by a cover asset pool, comprising mortgage and other assets,
segregated in the Bank’s accounts as autonomous patrimony and over which the holders of the
relevant covered debt securities have a special creditor privilege. The conditions of the covered debt
securities issues are framed in Decree-Law No. 59/2006, and in Notices No. 5, 6, and 8/2006 and
Instruction No. 13/2006 of Bank of Portugal. As at 31 December 2021, the assets that collateralize
These covered bonds are guaranteed by a cover asset pool, comprising mortgage and other assets, segregated in the Bank’s
accounts as autonomous patrimony and over which the holders of the relevant covered debt securities have a special creditor
privilege. The conditions of the covered debt securities issues are framed in Decree-Law No. 59/2006, and in Notices No. 5, 6, and
8/2006 and Instruction No. 13/2006 of Bank of Portugal. As at 31 December 2021, the assets that collateralize these covered debt
securities amount to Euro 6,075.1 million (31 December 2020: Euro 6,104.8 million) (see Note 22).
these covered debt securities amount to Euro 6,075.1 million (31 December 2020: Euro 6,104.8 million)
(see Note 22).
The changes in the financial years of 2021 and 2020 in Debt securities issued, subordinated debt and
financial liabilities associated to transferred assets was as follows:
The changes in the financial years of 2021 and 2020 in Debt securities issued, subordinated debt and financial liabilities associated
to transferred assets was as follows:
66
Debt securities issued
Euro Medium Term Notes (EMTN)
Bonds
Subordinated debt
Bonds
Financial liabilities associated to transferred assets
Asset lending operations
Balance as at
31.12.2020
Issues
Redemptions
Net
purchases
Other
movements a)
Balance as at
31.12.2021
(in thousands of Euros)
515 311
-
515 311
-
575 000
575 000
415 234
44 451
-
974 996
575 000
-
-
-
-
-
-
( 84 916)
-
( 84 916)
15 238
( 1 412)
13 826
445 633
573 588
1 019 221
-
-
160
415 394
-
44 451
( 84 916)
13 986
1 479 066
a) The other movements include accrued interest on the balance sheet, corrections for hedging operations, corrections of fair value and exchange rate variations.
Debt securities issued
Euro Medium Term Notes (EMTN)
Subordinated debt
Bonds
Financial liabilities associated to transferred assets
Asset lending operations
Balance as at
31.12.2019
Issues
Redemptions b)
Net
purchases
Other
movements a)
Balance as at
31.12.2020
(in thousands of Euros)
495 989
495 989
415 069
133 387
1 044 445
-
-
-
-
-
-
-
-
( 88 251)
( 88 251)
( 570)
( 570)
19 892
19 892
515 311
515 311
-
-
( 570)
165
415 234
( 685)
19 372
44 451
974 996
a) The other movements include accrued interest on the balance sheet, corrections for hedging operations, corrections of fair value and exchange rate variations.
b) During the year of 2020, the Lusitano SME issue no. 3, on balance in 2019, was fully repaid (Classes D, E and S).
Liability Management Exercise (LME)
On July 30, 2021, following a voluntary tender offer (Tender Offer and Solicitation Memorandum), EMTN issued by the Luxembourg
branch were redeemed, with a total nominal value of 84.3 million euros (representing 31.9% of the total nominal amount issued). This
operation resulted in a loss of Euro 73,415 thousand.
386
The main characteristics of the debt securities issued and the subordinated debt, as at 31 December 2021 and 2020, are as follows:
(in thousands of Euros)
Entity
ISIN
Description
Currency
Issue date
Maturity
Interest rate
Market
31.12.2021
Unit price
Carrying
(€)
Book value
PTNOBIOM0014
PTNOBJOM0005
NB 3.5% 23/07/24 OBRG.
NB 4.25% 09/23 OBRG.
100.00
100.00
303 571
270 017 a)
2024
2022
Fixed rate 3.5%
XDUB
Euribor 3M + 4.25% XDUB
XS0869315241
XS0877741479
XS0888530911
XS0897950878
XS0972653132
XS1031115014
XS1034421419
XS1038896426
XS1042343308
XS1053939978
XS1055501974
XS1058257905
BES Luxembourg 3.5% 02/01/43
BES Luxembourg 3.5% 23/01/43
BES Luxembourg 3.5% 19/02/2043
BES Luxembourg 3.5% 18/03/2043
BES Luxembourg ZC
Banco Esp San Lux ZC 12/02/49
Banco Esp San Lux ZC 19/02/49
Banco Esp San Lux ZC 27/02/51
BES Luxembourg ZC 06/03/2051
BES Luxembourg ZC 03/04/48
BES Luxembourg ZC 09/04/52
BES Luxembourg ZC 16/04/46
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
2021
2021
2013
2013
2013
2013
2013
2014
2014
2014
2014
2014
2014
2014
Bonds
novobanco
novobanco
Euro Medium Term Notes
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
Subordinated debt
NOVO BANCO
a) Date of the next call option
2043
2043
2043
2043
2048
2049
2049
2051
2051
2048
2052
2046
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
42 807
98 081
63 952
47 063
33 649
40 947
11 375
15 602
10 974
37 479
36 512
7 192
1 434 615
PTNOBFOM0017
NB 06/07/2028
EUR
2018
100.00
415 394
2023 a)
8.50%
XDUB
67
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
These covered bonds are guaranteed by a cover asset pool, comprising mortgage and other assets, segregated in the Bank’s
accounts as autonomous patrimony and over which the holders of the relevant covered debt securities have a special creditor
privilege. The conditions of the covered debt securities issues are framed in Decree-Law No. 59/2006, and in Notices No. 5, 6, and
8/2006 and Instruction No. 13/2006 of Bank of Portugal. As at 31 December 2021, the assets that collateralize these covered debt
securities amount to Euro 6,075.1 million (31 December 2020: Euro 6,104.8 million) (see Note 22).
The changes in the financial years of 2021 and 2020 in Debt securities issued, subordinated debt and financial liabilities associated
to transferred assets was as follows:
Debt securities issued
Euro Medium Term Notes (EMTN)
Bonds
Subordinated debt
Bonds
Financial liabilities associated to transferred assets
Asset lending operations
a) The other movements include accrued interest on the balance sheet, corrections for hedging operations, corrections of fair value and exchange rate variations.
44 451
-
-
44 451
974 996
575 000
( 84 916)
13 986
1 479 066
Balance as at
31.12.2020
Issues
Redemptions
Net
Other
Balance as at
purchases
movements a)
31.12.2021
(in thousands of Euros)
515 311
-
515 311
-
575 000
575 000
( 84 916)
( 84 916)
15 238
( 1 412)
13 826
445 633
573 588
1 019 221
415 234
160
415 394
-
-
-
Balance as at
31.12.2019
Issues
Redemptions b)
Net
Other
purchases
movements a)
Balance as at
31.12.2020
(in thousands of Euros)
-
-
-
-
-
-
-
-
-
( 88 251)
( 88 251)
( 570)
( 570)
19 892
19 892
515 311
515 311
-
-
( 570)
165
415 234
( 685)
19 372
44 451
974 996
Debt securities issued
Euro Medium Term Notes (EMTN)
Subordinated debt
Bonds
Financial liabilities associated to transferred assets
Asset lending operations
495 989
495 989
415 069
133 387
1 044 445
-
-
-
-
-
a) The other movements include accrued interest on the balance sheet, corrections for hedging operations, corrections of fair value and exchange rate variations.
b) During the year of 2020, the Lusitano SME issue no. 3, on balance in 2019, was fully repaid (Classes D, E and S).
Liability Management Exercise (LME)
Liability Management Exercise (LME)
On July 30, 2021, following a voluntary tender offer (Tender Offer and Solicitation Memorandum),
EMTN issued by the Luxembourg branch were redeemed, with a total nominal value of 84.3 million
euros (representing 31.9% of the total nominal amount issued). This operation resulted in a loss of Euro
73,415 thousand.
On July 30, 2021, following a voluntary tender offer (Tender Offer and Solicitation Memorandum), EMTN issued by the Luxembourg
branch were redeemed, with a total nominal value of 84.3 million euros (representing 31.9% of the total nominal amount issued). This
operation resulted in a loss of Euro 73,415 thousand.
The main characteristics of the debt securities issued and the subordinated debt, as at 31 December
2021 and 2020, are as follows:
The main characteristics of the debt securities issued and the subordinated debt, as at 31 December 2021 and 2020, are as follows:
(in thousands of Euros)
Entity
ISIN
Description
Currency
Issue date
31.12.2021
Unit price
(€)
Carrying
Book value
Maturity
Interest rate
Market
Bonds
novobanco
novobanco
Euro Medium Term Notes
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
novobanco Luxemburgo
Subordinated debt
NOVO BANCO
a) Date of the next call option
Euro Medium Term Notes
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
Subordinated debt
NOVO BANCO
a) Date of the next call option
PTNOBIOM0014
PTNOBJOM0005
NB 3.5% 23/07/24 OBRG.
NB 4.25% 09/23 OBRG.
XS0869315241
XS0877741479
XS0888530911
XS0897950878
XS0972653132
XS1031115014
XS1034421419
XS1038896426
XS1042343308
XS1053939978
XS1055501974
XS1058257905
BES Luxembourg 3.5% 02/01/43
BES Luxembourg 3.5% 23/01/43
BES Luxembourg 3.5% 19/02/2043
BES Luxembourg 3.5% 18/03/2043
BES Luxembourg ZC
Banco Esp San Lux ZC 12/02/49
Banco Esp San Lux ZC 19/02/49
Banco Esp San Lux ZC 27/02/51
BES Luxembourg ZC 06/03/2051
BES Luxembourg ZC 03/04/48
BES Luxembourg ZC 09/04/52
BES Luxembourg ZC 16/04/46
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
2021
2021
2013
2013
2013
2013
2013
2014
2014
2014
2014
2014
2014
2014
100.00
100.00
303 571
270 017 a)
2024
2022
Fixed rate 3.5%
XDUB
Euribor 3M + 4.25% XDUB
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
42 807
98 081
63 952
47 063
33 649
40 947
11 375
15 602
10 974
37 479
36 512
7 192
2043
2043
2043
2043
2048
2049
2049
2051
2051
2048
2052
2046
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
PTNOBFOM0017
NB 06/07/2028
EUR
2018
100.00
415 394
2023 a)
8.50%
XDUB
Entity
ISIN
Description
Currency
Issue date
XS0869315241
XS0877741479
XS0888530911
XS0897950878
XS0972653132
XS1031115014
XS1034421419
XS1038896426
XS1042343308
XS1053939978
XS1055501974
XS1058257905
BES Luxembourg 3.5% 02/01/43
BES Luxembourg 3.5% 23/01/43
BES Luxembourg 3.5% 19/02/2043
BES Luxembourg 3.5% 18/03/2043
BES Luxembourg ZC
Banco Esp San Lux ZC 12/02/49
Banco Esp San Lux ZC 19/02/49
Banco Esp San Lux ZC 27/02/51
BES Luxembourg ZC 06/03/2051
BES Luxembourg ZC 03/04/48
BES Luxembourg ZC 09/04/52
BES Luxembourg ZC 16/04/46
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
2013
2013
2013
2013
2013
2014
2014
2014
2014
2014
2014
2014
1 434 615
31.12.2020
Unit price
(€)
Carrying
Book value
(in thousands of Euros)
Maturity
Interest rate
Market
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
42 287
97 153
63 183
46 521
36 398
45 717
40 220
34 848
15 212
43 649
38 646
11 477
2043
2043
2043
2043
2048
2049
2049
2051
2051
2048
2052
2046
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
67
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
PTNOBFOM0017
NB 06/07/2028
EUR
2018
100.00
415 234
2023 a)
8.50%
XDUB
930 545
The Bank did not present capital or interest defaults on its debt issued in the financial years of 2021 and 2020.
The Bank did not present capital or interest defaults on its debt issued in the financial years of 2021 and
2020.
The residual duration of debt securities issued and subordinated liabilities as at 31 December 2021 and
2020 is as follows:
The residual duration of debt securities issued and subordinated liabilities as at 31 December 2021 and 2020 is as follows:
The non-derecognized securitization operations mentioned above implied the recording of financial liabilities associated with
transferred assets, which are detailed as follows:
FLITPTREL (1)
(1) asset transfer operation, with the Bank in the securities portfolio vehicle equity instruments
Debt securities issued
From 3 months to 1 year
From 1 to 5 years
More than 5 years
Subordinated debt
From 1 to 5 years
Financial liabilities associated to transferred assets
Undertimined maturity
387
(in thousands of Euros)
31.12.2021
31.12.2020
270 017
303 571
445 633
1 019 221
-
-
515 311
515 311
415 394
415 394
415 234
415 234
44 451
44 451
44 451
44 451
1 479 066
974 996
(in thousands of Euros)
31.12.2021
31.12.2020
44 451
44 451
44 451
44 451
68
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Description
Description
Currency
Issue date
Currency
Issue date
Unit price
Carrying
31.12.2020
Unit price
(€)
(€)
Book value
Carrying
Book value
Maturity
Interest rate
Market
Maturity
Interest rate
Market
31.12.2020
(in thousands of Euros)
(in thousands of Euros)
Entity
Entity
Euro Medium Term Notes
NB (Luxembourg Branch)
Euro Medium Term Notes
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
NB (Luxembourg Branch)
Subordinated debt
NB (Luxembourg Branch)
NOVO BANCO
Subordinated debt
NOVO BANCO
a) Date of the next call option
ISIN
ISIN
XS0869315241
XS0877741479
XS0869315241
XS0888530911
XS0877741479
XS0897950878
XS0888530911
XS0972653132
XS0897950878
XS1031115014
XS0972653132
XS1034421419
XS1031115014
XS1038896426
XS1034421419
XS1042343308
XS1038896426
XS1053939978
XS1042343308
XS1055501974
XS1053939978
XS1058257905
XS1055501974
XS1058257905
BES Luxembourg 3.5% 02/01/43
BES Luxembourg 3.5% 23/01/43
BES Luxembourg 3.5% 02/01/43
BES Luxembourg 3.5% 19/02/2043
BES Luxembourg 3.5% 23/01/43
BES Luxembourg 3.5% 18/03/2043
BES Luxembourg 3.5% 19/02/2043
BES Luxembourg ZC
BES Luxembourg 3.5% 18/03/2043
Banco Esp San Lux ZC 12/02/49
BES Luxembourg ZC
Banco Esp San Lux ZC 19/02/49
Banco Esp San Lux ZC 12/02/49
Banco Esp San Lux ZC 27/02/51
Banco Esp San Lux ZC 19/02/49
BES Luxembourg ZC 06/03/2051
Banco Esp San Lux ZC 27/02/51
BES Luxembourg ZC 03/04/48
BES Luxembourg ZC 06/03/2051
BES Luxembourg ZC 09/04/52
BES Luxembourg ZC 03/04/48
BES Luxembourg ZC 16/04/46
BES Luxembourg ZC 09/04/52
BES Luxembourg ZC 16/04/46
PTNOBFOM0017
NB 06/07/2028
PTNOBFOM0017
NB 06/07/2028
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
2013
2013
2013
2013
2013
2013
2013
2013
2013
2014
2013
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2018
2018
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
42 287
97 153
42 287
63 183
97 153
46 521
63 183
36 398
46 521
45 717
36 398
40 220
45 717
34 848
40 220
15 212
34 848
43 649
15 212
38 646
43 649
11 477
38 646
11 477
2043
2043
2043
2043
2043
2043
2043
2048
2043
2049
2048
2049
2049
2051
2049
2051
2051
2048
2051
2052
2048
2046
2052
2046
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Fixed rate 3.5%
Zero Coupon
Fixed rate 3.5%
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
Zero Coupon
100.00
415 234
2023 a)
8.50%
100.00
930 545
415 234
930 545
2023 a)
8.50%
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XLUX
XDUB
XDUB
a) Date of the next call option
The Bank did not present capital or interest defaults on its debt issued in the financial years of 2021 and 2020.
The Bank did not present capital or interest defaults on its debt issued in the financial years of 2021 and 2020.
The residual duration of debt securities issued and subordinated liabilities as at 31 December 2021 and 2020 is as follows:
The residual duration of debt securities issued and subordinated liabilities as at 31 December 2021 and 2020 is as follows:
(in thousands of Euros)
31.12.2021
(in thousands of Euros)
31.12.2020
Debt securities issued
From 3 months to 1 year
Debt securities issued
From 1 to 5 years
From 3 months to 1 year
More than 5 years
From 1 to 5 years
More than 5 years
Subordinated debt
From 1 to 5 years
Subordinated debt
From 1 to 5 years
Financial liabilities associated to transferred assets
Undertimined maturity
Financial liabilities associated to transferred assets
Undertimined maturity
31.12.2021
31.12.2020
270 017
303 571
270 017
445 633
303 571
1 019 221
445 633
1 019 221
415 394
415 394
415 394
415 394
44 451
44 451
44 451
1 479 066
44 451
1 479 066
-
-
-
515 311
-
515 311
515 311
515 311
415 234
415 234
415 234
415 234
44 451
44 451
44 451
974 996
44 451
974 996
The non-derecognized securitization operations mentioned above implied the recording of financial
liabilities associated with transferred assets, which are detailed as follows:
The non-derecognized securitization operations mentioned above implied the recording of financial liabilities associated with
transferred assets, which are detailed as follows:
The non-derecognized securitization operations mentioned above implied the recording of financial liabilities associated with
(in thousands of Euros)
transferred assets, which are detailed as follows:
FLITPTREL (1)
FLITPTREL (1)
(1) asset transfer operation, with the Bank in the securities portfolio vehicle equity instruments
(1) asset transfer operation, with the Bank in the securities portfolio vehicle equity instruments
31.12.2021
(in thousands of Euros)
31.12.2020
31.12.2021
44 451
31.12.2020
44 451
44 451
44 451
44 451
44 451
44 451
44 451
NOTE 31 – PROVISIONS
As at 31 December 2021 and 2020, the caption Provisions presents the following changes:
NOTE 31 – PROVISIONS
As at 31 December 2021 and 2020, the caption Provisions presents the following changes:
Balance as at 31 December 2019
Charges / (Write-backs)
Utilizations
Exchange differences and others (a)
Balance as at 31 December 2020
Charges / (Write-backs)
Utilizations
Exchange differences and others
Balance as at 31 December 2021
Provision for
restructuring
Provision for
guarantees and
commitments
Commercial
Offers
Other
Provisions
Total
(in thousands of Euros)
24 044
123 915
( 42 188)
( 8 798)
96 973
10 070
( 60 358)
1
46 686
97 103
21 595
( 2 188)
( 15 026)
101 484
( 9 900)
-
191
91 775
41 334
( 629)
( 29 506)
-
-
11 199
-
( 10 205)
-
994
209 263
42 958
( 14 569)
( 8 736)
228 916
111 600
( 26 083)
24 282
338 715
371 744
187 839
( 88 451)
( 32 560)
438 572
68
111 770
( 96 646)
68
24 474
478 170
(a) Includes Euro 8,798 thousand of restructuring provisions and Euro 14,420 thousand of provisions for guarantees provided by the Spanish Branch transferred to discontinued operations
In order to meet the financial needs of its customers, the Bank assumes several irrevocable commitments and contingent liabilities,
consisting of financial guarantees, letters of credit and other credit commitments, which may require the payment by the Bank, on
behalf of its customers, in the event of specific, contractually prescribed events. Although these commitments are not recorded on
the balance sheet, they carry credit risk and, therefore, are part of the Bank's overall risk exposure.
The changes in the caption provisions for guarantees, are detailed as follows:
388
Balance as at 31 December 2019
Increases due to changes in credit risk
Decreases due to changes in credit risk
Utilized
Other moviments (a)
Balance as at 31 December 2020
Increases due to changes in credit risk
Decreases due to changes in credit risk
Other movements
Balance as at 31 December 2021
thousand on stage 3).
Balance as at 31 December 2019
Increases due to changes in credit risk
Decreases due to changes in credit risk
Other movements
Balance as at 31 December 2020
Increases due to changes in credit risk
Decreases due to changes in credit risk
Other movements
Balance as at 31 December 2021
(a) Includes Euro 14,420 thousand of provisions for guarantees provided by the Spanish Branch transferred to discontinued operations (Euro 2,360 thousand on stage 1 and Euros 12,060
The changes in the caption provisions for commitments are detailed as follows:
The restructuring provisions were set up within the scope of the commitments assumed before the European Commission arising
from the Bank's sale and restructuring process. During the financial year of 2020, a provision of Euro 127.4 million was set up, and
there was also a reversal of the provisions set up in 2016 and 2017 in the amount of Euro 3.4 million. During the 2021 fiscal year, a
net charge of Euro 10.1 million was made and Euro 60.4 million were utilized, so that as at 31 December 2021 the amount of
restructuring provisions on the balance sheet is Euro 46.7 million.
Stage 1
Stage 2
Stage 3
Total
(in thousands of Euros)
3 575
830
( 698)
-
( 2 393)
1 314
596
( 593)
128
1 445
14 061
20 441
( 12 790)
-
2 293
24 005
3 006
( 17 826)
( 2 355)
76 387
23 301
( 15 991)
( 2 188)
( 14 923)
66 586
14 833
( 12 772)
2 417
94 023
44 572
( 29 479)
( 2 188)
( 15 023)
91 905
18 435
( 31 191)
190
6 830
71 064
79 339
Stage 1
Stage 2
Stage 3
Total
(in thousands of Euros)
1 935
6 325
( 3 708)
1 071
5 623
1 876
( 1 780)
636
1 145
5 488
( 1 570)
( 1 107)
3 956
6 857
( 5 961)
( 723)
6 355
4 129
-
-
-
( 33)
33
1 897
( 33)
88
1 952
3 080
11 813
( 5 311)
( 3)
9 579
10 630
( 7 774)
1
12 436
69
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 31 – PROVISIONS
As at 31 December 2021 and 2020, the caption Provisions presents the following changes:
NOTE 31 – PROVISIONS
As at 31 December 2021 and 2020, the caption Provisions presents the following changes:
Provision for
restructuring
Provision for
restructuring
24 044
Provision for
guarantees and
commitments
Provision for
guarantees and
commitments
97 103
Commercial
Offers
Commercial
Other
Provisions
Other
Offers
41 334
Provisions
209 263
Balance as at 31 December 2019
Charges / (Write-backs)
Balance as at 31 December 2019
Utilizations
Charges / (Write-backs)
Exchange differences and others (a)
Utilizations
Balance as at 31 December 2020
Balance as at 31 December 2020
Exchange differences and others (a)
Charges / (Write-backs)
Utilizations
Charges / (Write-backs)
Exchange differences and others
Utilizations
Balance as at 31 December 2021
Exchange differences and others
123 915
24 044
( 42 188)
123 915
( 8 798)
( 42 188)
96 973
( 8 798)
10 070
96 973
( 60 358)
10 070
1
( 60 358)
46 686
1
21 595
97 103
( 2 188)
21 595
( 15 026)
( 2 188)
101 484
( 15 026)
( 9 900)
101 484
-
( 9 900)
191
-
91 775
191
( 629)
41 334
( 29 506)
( 629)
-
-
( 29 506)
11 199
-
-
-
11 199
( 10 205)
-
-
( 10 205)
994
-
(in thousands of Euros)
(in thousands of Euros)
Total
Total
371 744
187 839
371 744
( 88 451)
187 839
( 32 560)
( 88 451)
438 572
( 32 560)
111 770
438 572
( 96 646)
111 770
24 474
( 96 646)
478 170
24 474
42 958
209 263
( 14 569)
42 958
( 8 736)
( 14 569)
228 916
( 8 736)
111 600
228 916
( 26 083)
111 600
24 282
( 26 083)
338 715
24 282
Balance as at 31 December 2021
(a) Includes Euro 8,798 thousand of restructuring provisions and Euro 14,420 thousand of provisions for guarantees provided by the Spanish Branch transferred to discontinued operations
338 715
91 775
46 686
994
478 170
In order to meet the financial needs of its customers, the Bank assumes several irrevocable
commitments and contingent liabilities, consisting of financial guarantees, letters of credit and other
credit commitments, which may require the payment by the Bank, on behalf of its customers, in the
In order to meet the financial needs of its customers, the Bank assumes several irrevocable commitments and contingent liabilities,
(a) Includes Euro 8,798 thousand of restructuring provisions and Euro 14,420 thousand of provisions for guarantees provided by the Spanish Branch transferred to discontinued operations
consisting of financial guarantees, letters of credit and other credit commitments, which may require the payment by the Bank, on
behalf of its customers, in the event of specific, contractually prescribed events. Although these commitments are not recorded on
In order to meet the financial needs of its customers, the Bank assumes several irrevocable commitments and contingent liabilities,
the balance sheet, they carry credit risk and, therefore, are part of the Bank's overall risk exposure.
consisting of financial guarantees, letters of credit and other credit commitments, which may require the payment by the Bank, on
behalf of its customers, in the event of specific, contractually prescribed events. Although these commitments are not recorded on
The changes in the caption provisions for guarantees, are detailed as follows:
the balance sheet, they carry credit risk and, therefore, are part of the Bank's overall risk exposure.
The changes in the caption provisions for guarantees, are detailed as follows:
event of specific, contractually prescribed events. Although these commitments are not recorded on
the balance sheet, they carry credit risk and, therefore, are part of the Bank’s overall risk exposure.
The changes in the caption provisions for guarantees, are detailed as follows:
Stage 1
Stage 2
Stage 3
Total
(in thousands of Euros)
Balance as at 31 December 2019
3 575
Stage 1
14 061
Stage 2
Balance as at 31 December 2020
Balance as at 31 December 2019
Increases due to changes in credit risk
Decreases due to changes in credit risk
Increases due to changes in credit risk
Utilized
Decreases due to changes in credit risk
Other moviments (a)
Utilized
Other moviments (a)
Increases due to changes in credit risk
Decreases due to changes in credit risk
Increases due to changes in credit risk
Other movements
Decreases due to changes in credit risk
Other movements
Balance as at 31 December 2020
Balance as at 31 December 2021
830
3 575
( 698)
830
-
( 698)
( 2 393)
-
1 314
( 2 393)
596
1 314
( 593)
596
128
( 593)
1 445
128
20 441
14 061
( 12 790)
20 441
-
( 12 790)
2 293
-
24 005
2 293
3 006
24 005
( 17 826)
3 006
( 2 355)
( 17 826)
6 830
( 2 355)
76 387
Stage 3
(in thousands of Euros)
94 023
Total
44 572
94 023
( 29 479)
44 572
( 2 188)
( 29 479)
( 15 023)
( 2 188)
91 905
( 15 023)
18 435
91 905
( 31 191)
18 435
190
( 31 191)
79 339
190
23 301
76 387
( 15 991)
23 301
( 2 188)
( 15 991)
( 14 923)
( 2 188)
66 586
( 14 923)
14 833
66 586
( 12 772)
14 833
2 417
( 12 772)
71 064
2 417
(a) Includes Euro 14,420 thousand of provisions for guarantees provided by the Spanish Branch transferred to discontinued operations (Euro 2,360 thousand on stage 1 and Euros 12,060
thousand on stage 3).
Balance as at 31 December 2021
71 064
6 830
1 445
79 339
The changes in the caption provisions for commitments are detailed as follows:
The changes in the caption provisions for commitments are detailed as follows:
Stage 1
Stage 2
Stage 3
Total
(in thousands of Euros)
(a) Includes Euro 14,420 thousand of provisions for guarantees provided by the Spanish Branch transferred to discontinued operations (Euro 2,360 thousand on stage 1 and Euros 12,060
The changes in the caption provisions for commitments are detailed as follows:
thousand on stage 3).
Balance as at 31 December 2019
1 935
Stage 1
1 145
Stage 2
Stage 3
Balance as at 31 December 2020
Balance as at 31 December 2019
Increases due to changes in credit risk
Decreases due to changes in credit risk
Increases due to changes in credit risk
Other movements
Decreases due to changes in credit risk
Other movements
Increases due to changes in credit risk
Decreases due to changes in credit risk
Increases due to changes in credit risk
Other movements
Decreases due to changes in credit risk
Other movements
Balance as at 31 December 2020
Balance as at 31 December 2021
6 325
1 935
( 3 708)
6 325
1 071
( 3 708)
5 623
1 071
1 876
5 623
( 1 780)
1 876
636
( 1 780)
6 355
636
5 488
1 145
( 1 570)
5 488
( 1 107)
( 1 570)
3 956
( 1 107)
6 857
3 956
( 5 961)
6 857
( 723)
( 5 961)
4 129
( 723)
-
-
( 33)
-
33
( 33)
-
33
1 897
-
( 33)
1 897
88
( 33)
1 952
88
Total
11 813
3 080
( 5 311)
11 813
( 3)
( 5 311)
9 579
( 3)
10 630
9 579
( 7 774)
10 630
1
( 7 774)
12 436
1
(in thousands of Euros)
-
3 080
Balance as at 31 December 2021
The restructuring provisions were set up within the scope of the commitments assumed before the European Commission arising
from the Bank's sale and restructuring process. During the financial year of 2020, a provision of Euro 127.4 million was set up, and
there was also a reversal of the provisions set up in 2016 and 2017 in the amount of Euro 3.4 million. During the 2021 fiscal year, a
The restructuring provisions were set up within the scope of the commitments assumed before the European Commission arising
net charge of Euro 10.1 million was made and Euro 60.4 million were utilized, so that as at 31 December 2021 the amount of
from the Bank's sale and restructuring process. During the financial year of 2020, a provision of Euro 127.4 million was set up, and
restructuring provisions on the balance sheet is Euro 46.7 million.
there was also a reversal of the provisions set up in 2016 and 2017 in the amount of Euro 3.4 million. During the 2021 fiscal year, a
net charge of Euro 10.1 million was made and Euro 60.4 million were utilized, so that as at 31 December 2021 the amount of
restructuring provisions on the balance sheet is Euro 46.7 million.
12 436
1 952
4 129
6 355
Other provisions amounting to Euro 338.7 million (31 December 2020: Euro 228.9 million), are intended
to cover certain identified contingencies related to the Bank’s activities, the most relevant being:
The restructuring provisions were set up within the scope of the commitments assumed before the
European Commission arising from the Bank’s sale and restructuring process. During the financial year
of 2020, a provision of Euro 127.4 million was set up, and there was also a reversal of the provisions set
up in 2016 and 2017 in the amount of Euro 3.4 million. During the 2021 fiscal year, a net charge of Euro
10.1 million was made and Euro 60.4 million were utilized, so that as at 31 December 2021 the amount
of restructuring provisions on the balance sheet is Euro 46.7 million.
• Contingencies associated with ongoing tax processes. To cover for these contingencies, the Bank
maintains provisions of Euro 21.9 million (31 December 2020: Euro 20.4 million);
69
• Contingencies associated with legal proceedings amounting to Euro 4.2 million (31 December 2020:
Euro 6.6 million);
69
389
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Other provisions amounting to Euro 338.7 million (31 December 2020: Euro 228.9 million), are intended to cover certain identified
contingencies related to the Bank’s activities, the most relevant being:
Contingencies associated with ongoing tax processes. To cover for these contingencies, the Bank maintains provisions of
Euro 21.9 million (31 December 2020: Euro 20.4 million);
• Contingencies associated with sales processes in the amount of Euro 39.3 million (31 December
2020: Euro 41.1 million);
• Contingencies related to the undivided part of the Executive Committee’s pension plan, in the
amount of Euro 19.2 million (31 December 2020: Euro 19.2 million), transferred from the liability
items net of the value of the assets of the Pension Fund (see Note 15);
• The remaining amount, of Euro 254.1 million (31 December 2020: Euro 141.6 million), is intended to
cover losses arising from the Bank’s normal activity, such as fraud, theft and robbery and lawsuits
ongoing lawsuits for contingencies related to asset sale processes, among others.
Contingencies associated with legal proceedings amounting to Euro 4.2 million (31 December 2020: Euro 6.6 million);
Other provisions amounting to Euro 338.7 million (31 December 2020: Euro 228.9 million), are intended to cover certain identified
Contingencies associated with sales processes in the amount of Euro 39.3 million (31 December 2020: Euro 41.1 million);
contingencies related to the Bank’s activities, the most relevant being:
Contingencies associated with ongoing tax processes. To cover for these contingencies, the Bank maintains provisions of
Contingencies related to the undivided part of the Executive Committee's pension plan, in the amount of Euro 19.2 million
Euro 21.9 million (31 December 2020: Euro 20.4 million);
(31 December 2020: Euro 19.2 million), transferred from the liability items net of the value of the assets of the Pension Fund
Contingencies associated with legal proceedings amounting to Euro 4.2 million (31 December 2020: Euro 6.6 million);
(see Note 15);
Contingencies associated with sales processes in the amount of Euro 39.3 million (31 December 2020: Euro 41.1 million);
The remaining amount, of Euro 254.1 million (31 December 2020: Euro 141.6 million), is intended to cover losses arising
Contingencies related to the undivided part of the Executive Committee's pension plan, in the amount of Euro 19.2 million
from the Bank's normal activity, such as fraud, theft and robbery and lawsuits ongoing lawsuits for contingencies related to
asset sale processes, among others.
(31 December 2020: Euro 19.2 million), transferred from the liability items net of the value of the assets of the Pension Fund
(see Note 15);
The increase occurred in 2021 results from the State Budget Law for 2021 ("LOE 21"), which amended the rules of the Property
The remaining amount, of Euro 254.1 million (31 December 2020: Euro 141.6 million), is intended to cover losses arising
Transfer Tax Code ("IMT") and the Municipal Property Tax ("IMI"), with the extension of the scope of the aggravated rate of IMI and
from the Bank's normal activity, such as fraud, theft and robbery and lawsuits ongoing lawsuits for contingencies related to
IMT, and loss of exemptions, to real estate owned by taxpayers that are controlled, directly or indirectly, by an entity that is subject to
asset sale processes, among others.
a more favorable tax regime, included in the list approved by the Minister of Finance. At this date, the extent of the application of
these new rules in terms of subjection to novobanco is pending clarification, according to a binding information request made to the
The increase occurred in 2021 results from the State Budget Law for 2021 ("LOE 21"), which amended the rules of the Property
Tax Authority.
Transfer Tax Code ("IMT") and the Municipal Property Tax ("IMI"), with the extension of the scope of the aggravated rate of IMI and
IMT, and loss of exemptions, to real estate owned by taxpayers that are controlled, directly or indirectly, by an entity that is subject to
As at 31 December 2021, based on the opinions obtained from legal and tax experts, and as a result of internal evaluation, it is not
a more favorable tax regime, included in the list approved by the Minister of Finance. At this date, the extent of the application of
considered possible, with complete assurance, to remove the doubt as to the application of the new rules referred to above, although
these new rules in terms of subjection to novobanco is pending clarification, according to a binding information request made to the
it is admitted that there may be other interpretations since these are new rules, not yet applied, and therefore subject to interpretation.
Tax Authority.
As of this date, the calculation of the application of the increased IMI rates to all the properties directly and indirectly owned by
novobanco amounts to approximately 115.8 million euros for 2021, and there is no expectation as to the date on which clarification
As at 31 December 2021, based on the opinions obtained from legal and tax experts, and as a result of internal evaluation, it is not
will be obtained from the Tax Authority or other similar entity that will determine the existence or not of an effective increase in liabilities
considered possible, with complete assurance, to remove the doubt as to the application of the new rules referred to above, although
for Novobanco. Thus, in December 2021 a provision was set up for this contingency with a more probable risk than not of an outflow
it is admitted that there may be other interpretations since these are new rules, not yet applied, and therefore subject to interpretation.
of resources incorporating economic benefits, in the above-mentioned amount of 115.8 million euros, which is included in Other
As of this date, the calculation of the application of the increased IMI rates to all the properties directly and indirectly owned by
provisions.
novobanco amounts to approximately 115.8 million euros for 2021, and there is no expectation as to the date on which clarification
will be obtained from the Tax Authority or other similar entity that will determine the existence or not of an effective increase in liabilities
NOTE 32 – OTHER LIABILITIES
for Novobanco. Thus, in December 2021 a provision was set up for this contingency with a more probable risk than not of an outflow
NOTE 32 – OTHER LIABILITIES
of resources incorporating economic benefits, in the above-mentioned amount of 115.8 million euros, which is included in Other
As at 31 December 2021 and 2020, the caption Other liabilities is analyzed as follows:
provisions.
As at 31 December 2021 and 2020, the caption Other liabilities is analyzed as follows:
As at 31 December 2021, based on the opinions obtained from legal and tax experts, and as a result
of internal evaluation, it is not considered possible, with complete assurance, to remove the doubt as
to the application of the new rules referred to above, although it is admitted that there may be other
interpretations since these are new rules, not yet applied, and therefore subject to interpretation. As of
this date, the calculation of the application of the increased IMI rates to all the properties directly and
indirectly owned by novobanco amounts to approximately 115.8 million euros for 2021, and there is no
expectation as to the date on which clarification will be obtained from the Tax Authority or other similar
entity that will determine the existence or not of an effective increase in liabilities for Novobanco. Thus,
in December 2021 a provision was set up for this contingency with a more probable risk than not of an
outflow of resources incorporating economic benefits, in the above-mentioned amount of 115.8 million
euros, which is included in Other provisions.
The increase occurred in 2021 results from the State Budget Law for 2021 (“LOE 21”), which amended
the rules of the Property Transfer Tax Code (“IMT”) and the Municipal Property Tax (“IMI”), with the
extension of the scope of the aggravated rate of IMI and IMT, and loss of exemptions, to real estate
owned by taxpayers that are controlled, directly or indirectly, by an entity that is subject to a more
favorable tax regime, included in the list approved by the Minister of Finance. At this date, the extent
of the application of these new rules in terms of subjection to novobanco is pending clarification,
according to a binding information request made to the Tax Authority.
NOTE 32 – OTHER LIABILITIES
(in thousands of Euros)
31.12.2021
31.12.2020
As at 31 December 2021 and 2020, the caption Other liabilities is analyzed as follows:
Public sector
Creditors for supply of goods
Other creditors
Career bonuses (see Note 15)
Retirement pensions and health-care benefits (see Note 15)
Public sector
Other accrued expenses
Creditors for supply of goods
Deferred income
Other creditors
Foreign exchange transactions to be settled
Career bonuses (see Note 15)
Other transactions pending settlement
Retirement pensions and health-care benefits (see Note 15)
Other accrued expenses
Deferred income
Foreign exchange transactions to be settled
Other transactions pending settlement
36 290
98 983
92 499
7 335
22 562
36 290
69 069
98 983
888
92 499
14
7 335
35 196
22 562
69 069
362 836
888
14
As at 31 December 2021, the caption Creditors for supply of goods includes Euro 79,998 thousand related to creditors of assets for
35 196
right of use (31 December 2020: Euro 47,973 thousand), whose maturity dates are present the following detail:
362 836
32 532
(in thousands of Euros)
65 586
62 119
7 465
24 692
32 532
67 642
65 586
955
62 119
-
7 465
53 620
24 692
67 642
314 611
955
-
53 620
31.12.2021
31.12.2020
314 611
As at 31 December 2021, the caption Creditors for supply of goods includes Euro 79,998 thousand
related to creditors of assets for right of use (31 December 2020: Euro 47,973 thousand), whose
maturity dates are present the following detail:
(in thousands of Euros)
As at 31 December 2021, the caption Creditors for supply of goods includes Euro 79,998 thousand related to creditors of assets for
right of use (31 December 2020: Euro 47,973 thousand), whose maturity dates are present the following detail:
31.12.2021
31.12.2020
Up to 3 months
From 3 months to one year
From one to five years
More than five years
Up to 3 months
From 3 months to one year
From one to five years
More than five years
31.12.2021
233
1 177
18 429
60 159
233
79 998
1 177
18 429
60 159
31.12.2020
78
(in thousands of Euros)
438
26 118
21 339
78
47 973
438
26 118
21 339
79 998
47 973
70
70
390
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 33 – SHARE CAPITAL
NOTE 33 – SHARE CAPITAL
Ordinary Shares
As at 31 December 2021, the Bank's share capital of Euro 6,054,907,314 is represented by 9,954,907,311 registered shares with
Ordinary Shares
no par value and is fully subscribed and paid up by the following shareholders (31 December 2020: share capital of Euro
As at 31 December 2021, the Bank’s share capital of Euro 6,054,907,314 is represented by 9,954,907,311
5,900,000,000 represented by 9,799,999,997 registered shares):
registered shares with no par value and is fully subscribed and paid up by the following shareholders
(31 December 2020: share capital of Euro 5,900,000,000 represented by 9,799,999,997 registered
shares):
Nani Holdings, SGPS, SA (1)
Fundo de Resolução (2)
Direcção-Geral do Tesouro e Finanças
% Share Capital
31.12.2021
31.12.2020
73,83%
24,61%
1,56%
75,00%
25,00%
-
100,00%
100,00%
(1) as a result of the agreements celebrated betw een Fundo de Resolução and the shareholder Lone Star in the context of the sale of 75% of the share capital of novobanco, only
Fundo de Resolução w ill see its participation diluted w ith the conversion of the conversion rights, pending the delivery of the shares by Fundo de Resolução to Nani Holdings on
December 31, 2021. When such delivery occurs, Nani Holdings' shareholding percentage w ill increase to 75.00% and Fundo de Resolução to 23.44%. Nani Holdings' economic
interest in the new bank remains unchanged at 75%.
(2) In view of the commitments assumed by the Portuguese Republic before the European Commisson, Fundo de Resolução is inhibited from exercising its voting rights.
In December 2021, a capital increase of Euro 154,907 thousand was carried out through the conversion of the conversion rights
(resulting from the Special Regime Applicable to Deferred Tax Assets) for the year 2015, which gave the State a 1.56% stake in the
novobanco, and which resulted in the issuance of 154,907,314 new ordinary shares (see Note 34).
to approximately 16.63% of the share capital of novobanco, which will only dilute, in accordance with
the sale agreement, the stake of the Resolution Fund.
In December 2021, a capital increase of Euro 154,907 thousand was carried out through the conversion
of the conversion rights (resulting from the Special Regime Applicable to Deferred Tax Assets) for the
year 2015, which gave the State a 1.56% stake in the novobanco, and which resulted in the issuance of
154,907,314 new ordinary shares (see Note 34).
In the financial year 2017 and following the acquisition of 75% of the share capital of novobanco by Lone Star, two capital increases
in the amounts of Euro 750 million and Euro 250 million, in October and December, respectively, were realised.
For the years 2016 and 2017, the Tax Authority has already validated the tax credit, and the final amount
of conversion rights attributed to the State represents an additional 4.13% stake in the share capital of
novobanco (5.69% for the years 2015 to 2017). This conversion will be exercised in accordance with the
procedures and deadlines established in the legal regime. The issuer of these rights has agreed with the
shareholders that clarification will be sought from the state regarding the procedure for the conversion
of these rights. As soon as this clarification is received, the conversion of the rights for the financial
years 2016 and 2017 will take place.
In the financial year 2017 and following the acquisition of 75% of the share capital of novobanco by
Lone Star, two capital increases in the amounts of Euro 750 million and Euro 250 million, in October and
December, respectively, were realised.
As mentioned in Note 30, novobanco adhered to the Special Regime applicable to Deferred Tax Assets (DTA) approved by Law
No. 61/2014, of 26 August. Said regime applies to deferred tax assets related to the non-deduction, for corporate income tax
purposes, of costs and negative equity changes recorded up to 31 December 2015 for impairment losses on loans and advances
to customers and with employee post-employment or long-term benefits. Said regime foresees that those assets can be converted
into tax credits when the taxable entity reports an annual net loss.
As mentioned in Note 30, novobanco adhered to the Special Regime applicable to Deferred Tax Assets
(DTA) approved by Law No. 61/2014, of 26 August. Said regime applies to deferred tax assets related to
the non-deduction, for corporate income tax purposes, of costs and negative equity changes recorded
up to 31 December 2015 for impairment losses on loans and advances to customers and with employee
post-employment or long-term benefits. Said regime foresees that those assets can be converted into
tax credits when the taxable entity reports an annual net loss.
The conversion of the eligible deferred tax assets into tax credits was made according to the proportion of the amount of said net
loss to total equity at the individual company level. A special reserve was established with an amount identical to the tax credit
approved, increased by 10%. This special reserve was established using the originating reserve and is to be incorporated in the
share capital.
The conversion of the eligible deferred tax assets into tax credits was made according to the proportion
of the amount of said net loss to total equity at the individual company level. A special reserve was
established with an amount identical to the tax credit approved, increased by 10%. This special reserve
was established using the originating reserve and is to be incorporated in the share capital.
The conversion rights are securities that entitle the State to require novobanco to increase its share capital by incorporating the
amount of the special reserve and consequently issuing and delivering free of charge ordinary shares. It is estimated that the
conversion rights to be issued and attributed to the State following the negative net results of the years between 2015 and 2020 will
give it a stake of up to approximately 16.63% of the share capital of novobanco, which will only dilute, in accordance with the sale
agreement, the stake of the Resolution Fund.
NOTE 34 – ACCUMULATED OTHER
COMPREHENSIVE INCOME, RETAINED EARNINGS,
OTHER RESERVES
As at 31 December 2021 and 2020, the accumulated other comprehensive income, retained earnings
and other reserves present the following detail:
The conversion rights are securities that entitle the State to require novobanco to increase its share
capital by incorporating the amount of the special reserve and consequently issuing and delivering free
of charge ordinary shares. It is estimated that the conversion rights to be issued and attributed to the
State following the negative net results of the years between 2015 and 2020 will give it a stake of up
For the years 2016 and 2017, the Tax Authority has already validated the tax credit, and the final amount of conversion rights
attributed to the State represents an additional 4.13% stake in the share capital of novobanco (5.69% for the years 2015 to 2017).
This conversion will be exercised in accordance with the procedures and deadlines established in the legal regime. The issuer of
these rights has agreed with the shareholders that clarification will be sought from the state regarding the procedure for the
conversion of these rights. As soon as this clarification is received, the conversion of the rights for the financial years 2016 and 2017
will take place.
391
71
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 34 – ACCUMULATED OTHER COMPREHENSIVE INCOME, RETAINED EARNINGS, OTHER RESERVES
NOTE 34 – ACCUMULATED OTHER COMPREHENSIVE INCOME, RETAINED EARNINGS, OTHER RESERVES
As at 31 December 2021 and 2020, the accumulated other comprehensive income, retained earnings and other reserves present the
following detail:
As at 31 December 2021 and 2020, the accumulated other comprehensive income, retained earnings and other reserves present the
following detail:
Other accumulated comprehensive income
Other accumulated comprehensive income
Retained earnings
Other reserves
Retained earnings
Other reserves
Originating reserve
Originating reserve
Special reserve
Other reserves and Retained earnings
Special reserve
Other reserves and Retained earnings
Other accumulated comprehensive income
The movements in Other accumulated comprehensive income were as follows:
Other accumulated comprehensive income
Other accumulated comprehensive income
The movements in Other accumulated comprehensive income were as follows:
The movements in Other accumulated comprehensive income were as follows:
Other Comprehensive Income
Other Comprehensive Income
(in thousands of Euros)
31.12.2021
(in thousands of Euros)
31.12.2020
31.12.2021
( 968 987)
31.12.2020
( 749 259)
( 968 987)
( 8 576 860)
6 064 434
( 8 576 860)
1 848 691
6 064 434
1 848 691
701 136
3 514 607
701 136
3 514 607
( 3 481 413)
( 3 481 413)
( 749 259)
( 7 202 828)
6 179 422
( 7 202 828)
1 976 173
6 179 422
1 976 173
728 561
3 474 688
728 561
3 474 688
( 1 772 665)
( 1 772 665)
(in thousands of Euros)
(in thousands of Euros)
Impairment
Reserves
Impairment
Reserves
Credit Risk
Reserves
Credit Risk
Reserves
Sales related
Reserves
Sales related
Reserves
Fair value
Reserves
Fair value
Reserves
Actuarial
deviations (Net of
Actuarial
tax)
deviations (Net of
tax)
Total
Total
Balance as at 31 December 2019
Balance as at 31 December 2019
Actuarial deviations
Changes in fair value, net of tax
Actuarial deviations
Changes in credit risk on financial liabilities at fair value, net
Changes in fair value, net of tax
of tax
Changes in credit risk on financial liabilities at fair value, net
Impairment reserves of securities at fair value through other
of tax
comprehensive income
Impairment reserves of securities at fair value through other
Reserves from sales of securities at fair value through other
comprehensive income
comprehensive income
Reserves from sales of securities at fair value through other
comprehensive income
Balance as at 31 December 2020
Balance as at 31 December 2020
Actuarial deviations
Changes in fair value, net of tax
Actuarial deviations
Impairment reserves of securities at fair value through other
Changes in fair value, net of tax
comprehensive income
Impairment reserves of securities at fair value through other
Reserves from sales of securities at fair value through other
comprehensive income
comprehensive income
Reserves from sales of securities at fair value through other
comprehensive income
Balance as at 31 December 2021
5 505
5 505
-
-
-
-
-
-
( 1 838)
( 1 838)
-
-
3 667
3 667
-
-
-
-
1
1
-
-
3 668
( 1 669)
( 1 669)
-
-
-
-
10 883
10 883
-
-
-
-
9 214
9 214
-
-
-
-
-
-
-
( 8 432)
( 8 432)
-
-
-
-
-
-
-
-
( 16 356)
( 16 356)
( 24 788)
( 24 788)
-
-
-
-
-
-
( 9 518)
( 44 041)
( 44 041)
-
12 284
-
12 284
-
-
-
-
-
-
( 31 757)
( 31 757)
-
( 134 562)
-
( 134 562)
-
-
-
( 583 396)
( 583 396)
( 122 199)
-
( 122 199)
-
-
-
-
-
-
-
( 705 595)
( 705 595)
( 75 649)
-
( 75 649)
-
-
-
-
-
9 214
( 9 518)
( 34 306)
-
( 166 319)
-
( 781 244)
( 632 033)
( 632 033)
( 122 199)
12 284
( 122 199)
12 284
10 883
10 883
( 1 838)
( 1 838)
( 16 356)
( 16 356)
( 749 259)
( 749 259)
( 75 649)
( 134 562)
( 75 649)
( 134 562)
1
1
( 9 518)
( 9 518)
( 968 987)
3 668
Balance as at 31 December 2021
Fair value reserve
The fair value reserves represent the amount of the unrealised gains and losses arising from the securities portfolio classified as at
Fair value reserve
a fair value through other comprehensive income, net of impairment losses. The amount of this reserve is shown net of deferred
The fair value reserves represent the amount of the unrealised gains and losses arising from the securities portfolio classified as at
taxes.
a fair value through other comprehensive income, net of impairment losses. The amount of this reserve is shown net of deferred
taxes.
The changes occurred in the fair value reserves, net of deferred taxes and impairment losses may be analyzed as follows:
The changes occurred in the fair value reserves, net of deferred taxes and impairment losses may be analyzed as follows:
( 166 319)
( 968 987)
( 781 244)
( 34 306)
9 214
Fair value reserve
The fair value reserves represent the amount of the unrealised gains and losses arising from the
securities portfolio classified as at a fair value through other comprehensive income, net of impairment
losses. The amount of this reserve is shown net of deferred taxes.
31.12.2021
Balance at the beginning of the exercise
Balance at the beginning of the exercise
Changes in fair value
Foreign exchange differences
Changes in fair value
Disposals in the exercise
Foreign exchange differences
Deferred taxes
Disposals in the exercise
Deferred taxes
Balance at the end of the exercise
Balance at the end of the exercise
Fair value reserves
31.12.2021
Financial assets at
fair value through
Financial assets at
other comprehensive
fair value through
income
other comprehensive
70 520
income
Fair value reserves
Deferred tax
reserves
Deferred tax
reserves
Total fair
value reserves
Total fair
value reserves
( 31 757)
( 31 757)
( 191 007)
2 351
( 191 007)
( 5 177)
2 351
59 271
( 5 177)
59 271
( 166 319)
( 166 319)
( 102 277)
( 102 277)
-
-
-
-
-
-
59 271
59 271
( 43 006)
( 43 006)
70 520
( 191 007)
2 351
( 191 007)
( 5 177)
2 351
( 5 177)
-
( 123 313)
-
( 123 313)
The changes occurred in the fair value reserves, net of deferred taxes and impairment losses may be
analyzed as follows:
(in thousands of Euros)
31.12.2020
(in thousands of Euros)
Fair value reserves
31.12.2020
Financial assets at
fair value through
Financial assets at
other
fair value through
comprehensive
other
comprehensive
53 179
Fair value reserves
Deferred tax
reserves
Deferred tax
reserves
53 179
88 253
( 4 372)
88 253
( 66 540)
( 4 372)
( 66 540)
-
70 520
-
( 97 220)
( 97 220)
-
-
-
-
-
( 5 057)
-
( 5 057)
( 102 277)
70 520
( 102 277)
392
Total fair
value reserves
Total fair
value reserves
( 44 041)
( 44 041)
88 253
( 4 372)
88 253
( 66 540)
( 4 372)
( 5 057)
( 66 540)
( 5 057)
( 31 757)
( 31 757)
72
72
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTE 34 – ACCUMULATED OTHER COMPREHENSIVE INCOME, RETAINED EARNINGS, OTHER RESERVES
As at 31 December 2021 and 2020, the accumulated other comprehensive income, retained earnings and other reserves present the
following detail:
Other accumulated comprehensive income
Retained earnings
Other reserves
Originating reserve
Special reserve
Other reserves and Retained earnings
(in thousands of Euros)
31.12.2021
31.12.2020
( 968 987)
( 749 259)
( 8 576 860)
( 7 202 828)
6 064 434
1 848 691
701 136
3 514 607
6 179 422
1 976 173
728 561
3 474 688
( 3 481 413)
( 1 772 665)
Other accumulated comprehensive income
The movements in Other accumulated comprehensive income were as follows:
Other Comprehensive Income
(in thousands of Euros)
Impairment
Credit Risk
Sales related
Fair value
Reserves
Reserves
Reserves
Reserves
Actuarial
deviations (Net of
tax)
Total
Balance as at 31 December 2019
5 505
( 1 669)
( 8 432)
( 44 041)
( 583 396)
( 632 033)
( 122 199)
12 284
Actuarial deviations
Changes in fair value, net of tax
Changes in credit risk on financial liabilities at fair value, net
Impairment reserves of securities at fair value through other
Reserves from sales of securities at fair value through other
of tax
comprehensive income
comprehensive income
Actuarial deviations
Changes in fair value, net of tax
Impairment reserves of securities at fair value through other
Reserves from sales of securities at fair value through other
comprehensive income
comprehensive income
-
-
-
-
-
-
-
1
10 883
( 1 838)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
( 16 356)
( 9 518)
-
-
-
-
-
-
-
Balance as at 31 December 2020
3 667
9 214
( 24 788)
( 31 757)
( 705 595)
( 134 562)
( 75 649)
-
-
-
-
-
-
-
( 122 199)
12 284
10 883
( 1 838)
( 16 356)
( 749 259)
( 75 649)
( 134 562)
1
( 9 518)
Balance as at 31 December 2021
3 668
9 214
( 34 306)
( 166 319)
( 781 244)
( 968 987)
Fair value reserve
The fair value reserves represent the amount of the unrealised gains and losses arising from the securities portfolio classified as at
a fair value through other comprehensive income, net of impairment losses. The amount of this reserve is shown net of deferred
taxes.
The changes occurred in the fair value reserves, net of deferred taxes and impairment losses may be analyzed as follows:
31.12.2021
Fair value reserves
(in thousands of Euros)
31.12.2020
Fair value reserves
Financial assets at
fair value through
other comprehensive
income
Deferred tax
reserves
Total fair
value reserves
Financial assets at
fair value through
other
comprehensive
Deferred tax
reserves
Total fair
value reserves
Balance at the beginning of the exercise
70 520
( 102 277)
( 31 757)
Changes in fair value
Foreign exchange differences
Disposals in the exercise
Deferred taxes
The fair value reserves are analyzed as follows:
Balance at the end of the exercise
( 191 007)
2 351
( 5 177)
-
-
-
-
59 271
( 191 007)
2 351
( 5 177)
59 271
( 123 313)
( 43 006)
( 166 319)
53 179
88 253
( 4 372)
( 66 540)
-
70 520
( 97 220)
-
-
-
( 5 057)
( 44 041)
88 253
( 4 372)
( 66 540)
( 5 057)
( 102 277)
( 31 757)
(in thousands of Euros)
31.12.2021
31.12.2020
The fair value reserves are analyzed as follows:
The fair value reserves are analyzed as follows:
Amortised cost of financial assets at fair value through other comprehensive income
Market value of financial assets at fair value through other comprehensive income
Unrealised gains / (losses) recognized in fair value reserve
Fair value reserves for discontinuing activities
Amortised cost of financial assets at fair value through other comprehensive income
Deferred Taxes
Market value of financial assets at fair value through other comprehensive income
Fair value reserve attributable to shareholders of the Bank
Unrealised gains / (losses) recognized in fair value reserve
7 256 821
7 133 508
7 744 257
72
(in thousands of Euros)
7 813 584
31.12.2021
( 123 313)
31.12.2020
69 327
-
7 256 821
( 43 006)
7 133 508
( 166 319)
( 123 313)
1 193
7 744 257
( 102 277)
7 813 584
( 31 757)
69 327
Originating reserve
The originating reserve results from the difference between the assets and liabilities transferred from
BES to novobanco, on the terms defined in the resolution measure applied by Bank of Portugal to BES.
The amount of the reserve includes the effects of Bank of Portugal’s Resolution Measure (“Medida de
Resolução”) and those of the conclusions reached through the audit conducted by the independent
auditor nominated by Bank of Portugal.
Fair value reserves for discontinuing activities
Originating reserve
Deferred Taxes
The originating reserve results from the difference between the assets and liabilities transferred from BES to novobanco, on the
Fair value reserve attributable to shareholders of the Bank
terms defined in the resolution measure applied by Bank of Portugal to BES. The amount of the reserve includes the effects of Bank
of Portugal’s Resolution Measure (“Medida de Resolução”) and those of the conclusions reached through the audit conducted by the
independent auditor nominated by Bank of Portugal.
Originating reserve
The originating reserve results from the difference between the assets and liabilities transferred from BES to novobanco, on the
terms defined in the resolution measure applied by Bank of Portugal to BES. The amount of the reserve includes the effects of Bank
of Portugal’s Resolution Measure (“Medida de Resolução”) and those of the conclusions reached through the audit conducted by the
Special reserve
independent auditor nominated by Bank of Portugal.
As mentioned in Note 27, the special reserve was created as a result of the adhesion of novobanco to the Special Regime applicable
to Deferred Tax Assets approved by Law No. 61/2014, of 26 August, which implied the conversion of eligible deferred tax assets into
tax credits and the simultaneous establishment of a special reserve.
Special reserve
As mentioned in Note 27, the special reserve was created as a result of the adhesion of novobanco to the Special Regime applicable
Following the clearance of a negative net result in the years between 2015 and 2020, with reference to deferred tax assets eligible at
to Deferred Tax Assets approved by Law No. 61/2014, of 26 August, which implied the conversion of eligible deferred tax assets into
the date of closures of those financial years, the application of that special regime applicable to deferred tax assets, novobanco
tax credits and the simultaneous establishment of a special reserve.
recorded a special reserve, in the same amount of the tax credit calculated, increased by 10%, which has the following decomposition:
Special reserve
As mentioned in Note 27, the special reserve was created as a result of the adhesion of novobanco
( 166 319)
( 102 277)
( 31 757)
( 43 006)
1 193
-
to the Special Regime applicable to Deferred Tax Assets approved by Law No. 61/2014, of 26 August,
which implied the conversion of eligible deferred tax assets into tax credits and the simultaneous
establishment of a special reserve.
Following the clearance of a negative net result in the years between 2015 and 2020, with reference
to deferred tax assets eligible at the date of closures of those financial years, the application of that
special regime applicable to deferred tax assets, novobanco recorded a special reserve, in the same
amount of the tax credit calculated, increased by 10%, which has the following decomposition:
Following the clearance of a negative net result in the years between 2015 and 2020, with reference to deferred tax assets eligible at
the date of closures of those financial years, the application of that special regime applicable to deferred tax assets, novobanco
recorded a special reserve, in the same amount of the tax credit calculated, increased by 10%, which has the following decomposition:
(in thousands of Euros)
31.12.2020
31.12.2021
2016 (net loss of 2015)
2017 (net loss of 2016)
2018 (net loss of 2017)
2019 (net loss of 2018)
2016 (net loss of 2015)
2020 (net loss of 2019)
2017 (net loss of 2016)
2021 (net loss of 2020)
2018 (net loss of 2017)
2019 (net loss of 2018)
2020 (net loss of 2019)
2021 (net loss of 2020)
(in thousands of Euros)
31.12.2021
14 004
109 421
140 332
178 171
14 004
122 015
109 421
137 193
140 332
701 136
178 171
122 015
137 193
168 911
109 421
31.12.2020
150 044
178 171
168 911
122 014
109 421
-
150 044
728 561
178 171
122 014
-
With regard to the reserve set up in 2016 (relating to the negative net income of 2015), taking into account the legal deadlines provided
for in the Special Regime, in 2021 it was decided to increase the share capital by incorporation of reserves in the amount of Euro
154,907 thousand, with the remaining amount of the reserve in the amount of Euro 14,004 thousand (relating to goodwill), intended
to be incorporated into a special reserve subject to the legal reserve regime under the terms of article 295 of the Commercial
728 561
701 136
With regard to the reserve set up in 2016 (relating to the negative net income of 2015), taking into account the legal deadlines provided
Companies Code.
for in the Special Regime, in 2021 it was decided to increase the share capital by incorporation of reserves in the amount of Euro
154,907 thousand, with the remaining amount of the reserve in the amount of Euro 14,004 thousand (relating to goodwill), intended
to be incorporated into a special reserve subject to the legal reserve regime under the terms of article 295 of the Commercial
Other reserves and retained earnings
Companies Code.
Following the conditions agreed in the novobanco’s sale process, a Contingent Capital Agreement was created. In this context, if
the capital ratios fall below a certain threshold and, cumulatively, losses are recorded in a delimited asset portfolio, the Resolution
Fund makes a payment corresponding to the lower of the losses recorded and the amount necessary to restore the ratios to the
defined threshold, of up to a maximum of Euro 3,890 million (see Note 35 – Contingent liabilities and commitments). The capital
Other reserves and retained earnings
corresponds to a previously defined asset perimeter, with an initial net book value (June 2016) of around Euro 7.9 billion. As at 31
Following the conditions agreed in the novobanco’s sale process, a Contingent Capital Agreement was created. In this context, if
the capital ratios fall below a certain threshold and, cumulatively, losses are recorded in a delimited asset portfolio, the Resolution
December 2021 these assets had a net value of Euro 1.8 billion, mainly as a result of losses recorded as well as payments and
Fund makes a payment corresponding to the lower of the losses recorded and the amount necessary to restore the ratios to the
recoveries (31 December 2020: net value of Euro 2.1 billion).
defined threshold, of up to a maximum of Euro 3,890 million (see Note 35 – Contingent liabilities and commitments). The capital
corresponds to a previously defined asset perimeter, with an initial net book value (June 2016) of around Euro 7.9 billion. As at 31
Taking into consideration the losses presented by novobanco on December 31, 2020, 2019, 2018 and 2017, the conditions were
met that determined the payment by the Resolution Fund of Euro 429,013 thousand, Euro 1,035,016 thousand, Euro 1,149,295
December 2021 these assets had a net value of Euro 1.8 billion, mainly as a result of losses recorded as well as payments and
thousand and Euro 791,695 thousand in 2021, 2020, 2019 and 2018, respectively.
recoveries (31 December 2020: net value of Euro 2.1 billion).
The amount related to the Contingent Capital Agreement recorded in 2020 as receivable by the Resolution Fund (Euro 598,312
Taking into consideration the losses presented by novobanco on December 31, 2020, 2019, 2018 and 2017, the conditions were
met that determined the payment by the Resolution Fund of Euro 429,013 thousand, Euro 1,035,016 thousand, Euro 1,149,295
thousand) differs from the amount paid as a result of disagreements, between novobanco and the Resolution Fund, regarding (i) the
thousand and Euro 791,695 thousand in 2021, 2020, 2019 and 2018, respectively.
provision for discontinued operations in Spain and (ii) the valuation of participation units, leading to a limitation to the immediate
access to this amount, which despite being recorded as receivables, the Bank deducted, as at 31 December 2021, to the regulatory
The amount related to the Contingent Capital Agreement recorded in 2020 as receivable by the Resolution Fund (Euro 598,312
capital calculation (Euro 165,442 thousand). novobanco considers this amount to be due under the Contingent Capital Agreement
and is triggering the legal and contractual mechanisms at its disposal to ensure receipt of the same (see Note 35). Additionally, the
thousand) differs from the amount paid as a result of disagreements, between novobanco and the Resolution Fund, regarding (i) the
variable remuneration of the Executive Board of Directors for 2019 and 2020 (Euro 3,857 thousand) was also deducted.
provision for discontinued operations in Spain and (ii) the valuation of participation units, leading to a limitation to the immediate
access to this amount, which despite being recorded as receivables, the Bank deducted, as at 31 December 2021, to the regulatory
capital calculation (Euro 165,442 thousand). novobanco considers this amount to be due under the Contingent Capital Agreement
and is triggering the legal and contractual mechanisms at its disposal to ensure receipt of the same (see Note 35). Additionally, the
variable remuneration of the Executive Board of Directors for 2019 and 2020 (Euro 3,857 thousand) was also deducted.
73
73
393
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
With regard to the reserve set up in 2016 (relating to the negative net income of 2015), taking into
account the legal deadlines provided for in the Special Regime, in 2021 it was decided to increase the
share capital by incorporation of reserves in the amount of Euro 154,907 thousand, with the remaining
amount of the reserve in the amount of Euro 14,004 thousand (relating to goodwill), intended to be
incorporated into a special reserve subject to the legal reserve regime under the terms of article 295 of
the Commercial Companies Code.
Other reserves and retained earnings
Following the conditions agreed in the novobanco’s sale process, a Contingent Capital Agreement was
created. In this context, if the capital ratios fall below a certain threshold and, cumulatively, losses are
recorded in a delimited asset portfolio, the Resolution Fund makes a payment corresponding to the
lower of the losses recorded and the amount necessary to restore the ratios to the defined threshold,
of up to a maximum of Euro 3,890 million (see Note 35 – Contingent liabilities and commitments). The
capital corresponds to a previously defined asset perimeter, with an initial net book value (June 2016)
of around Euro 7.9 billion. As at 31 December 2021 these assets had a net value of Euro 1.8 billion, mainly
as a result of losses recorded as well as payments and recoveries (31 December 2020: net value of Euro
2.1 billion).
Taking into consideration the losses presented by novobanco on December 31, 2020, 2019, 2018 and
2017, the conditions were met that determined the payment by the Resolution Fund of Euro 429,013
thousand, Euro 1,035,016 thousand, Euro 1,149,295 thousand and Euro 791,695 thousand in 2021,
2020, 2019 and 2018, respectively.
NOTA 35 – CONTINGENT LIABILITIES AND COMMITMENTS
The amount related to the Contingent Capital Agreement recorded in 2020 as receivable by the
Resolution Fund (Euro 598,312 thousand) differs from the amount paid as a result of disagreements,
between novobanco and the Resolution Fund, regarding (i) the provision for discontinued operations in
Spain and (ii) the valuation of participation units, leading to a limitation to the immediate access to this
amount, which despite being recorded as receivables, the Bank deducted, as at 31 December 2021,
to the regulatory capital calculation (Euro 165,442 thousand). novobanco considers this amount to be
due under the Contingent Capital Agreement and is triggering the legal and contractual mechanisms at
its disposal to ensure receipt of the same (see Note 35). Additionally, the variable remuneration of the
Executive Board of Directors for 2019 and 2020 (Euro 3,857 thousand) was also deducted.
In 2021, an amount receivable by the Resolution Fund of Euro 209,220 thousand was recorded in
relation to the Contingent Capital Agreement, under Other Reserves and which results, on the date
of each balance sheet, from the losses incurred and the regulatory ratios in force at the time of its
determination. As a result of the above and in line with the Regulator’s guidelines, on 31 December
2021, this value was also deducted from the regulatory capital calculation.
NOTA 35 – CONTINGENT LIABILITIES AND
COMMITMENTS
In addition to the derivative financial instruments, the balances relating to off-balance accounts as at
31 December 2020 are the following:
In 2021, an amount receivable by the Resolution Fund of Euro 209,220 thousand was recorded in relation to the Contingent Capital
Agreement, under Other Reserves and which results, on the date of each balance sheet, from the losses incurred and the regulatory
ratios in force at the time of its determination. As a result of the above and in line with the Regulator's guidelines, on 31 December
2021, this value was also deducted from the regulatory capital calculation.
In addition to the derivative financial instruments, the balances relating to off-balance accounts as at 31 December 2020 are the
following:
Contingent liabilities
Guarantees and standby letters
Financial assets pledged as collateral
Open documentary credits
Commitments
Revocable commitments
Irrevocable commitments
(in thousands of Euros)
31.12.2021
31.12.2020
2 221 575
14 086 256
402 332
16 743 092
5 305 121
544 160
5 849 281
2 815 920
14 194 624
410 292
17 420 836
6 419 991
629 454
7 049 445
Guarantees and standby letters provided are banking operations that do not imply any mobilization of funds for the Bank.
As at 31 December 2021, the caption financial assets pledged as collateral includes:
The market value of financial assets pledged as collateral to the European Central Bank in the scope of a liquidity facility, in
the amount of Euro 13.1 billion (31 December 2020: Euro 13.1 billion);
Securities pledged as collateral to the Portuguese Securities and Exchange Commission (“Comissão do Mercado de Valores
Mobiliários” (CMVM)) in the scope of the Investors Indemnity System (“Sistema de Indemnização aos Investidores”), in the
amount of Euro 7.9 million (31 December 2020: Euro 8.1 million);
Securities pledged as collateral to the Deposits’ Guarantee Fund (“Fundo de Garantia de Depósitos”), in the amount of Euro
66.1 million (31 December 2020: Euro 69.5 million);
Securities pledged as collateral to the European Investment Bank, in the amount of Euro 651.4 million (31 December 2020:
Euro 769.7 million);
Securities delivered as collateral in connection with derivatives trading with a central counterparty in the amount of Euro
100.5 million (31 December 2020: Euro 107.0 million);
Deposits delivered as collateral in connection with derivatives trading with a central counterparty in the amount of Euro 100.0
million (31 December 2020: Euro 100.0 million).
The above-mentioned financial assets pledged as collateral are recorded in the various asset categories of the Bank’s balance sheet
and may be executed in the event the Bank does not fulfil its obligations under the terms and conditions of the contracts celebrated.
The increase in the value of securities pledged as collateral to the European Investment Bank is related to the reinforcement of the
collateral due to changes in the minimum required amounts.
Documentary credits are irrevocable commitments made by the Bank, on behalf of its customers, to pay or order to pay a certain
amount to a supplier of goods or services, within a determined period, upon the presentation of documentation of the expedition of
the goods or rendering of the services. The condition of “irrevocable” derives from the fact that they may not be cancelled neither
changed without the agreement of all involved parties.
Revocable and irrevocable commitments represent contractual agreements to extend credit to customers of the Bank (e.g. undrawn
credit lines), which are, generally, contracted for fixed periods of time or with other expiration conditions and, usually, require the
payment of a fee. Almost all credit commitments in force require that customers continue meeting certain conditions that were verified
at the time the credit was contracted.
Despite the characteristics of these contingent liabilities and commitments, these operations require a previous rigorous risk
assessment of the solvency of the customer and of its business, similarly to any other commercial operation. When necessary, the
Bank requires the collateralisation of these transactions. Since it is expected that the majority of these operations will mature without
any funds having been drawn, these amounts do not necessarily represent future cash out-flows.
74
394
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Guarantees and standby letters provided are banking operations that do not imply any mobilization of
funds for the Bank.
As at 31 December 2021, the caption financial assets pledged as collateral includes:
• The market value of financial assets pledged as collateral to the European Central Bank in the scope
of a liquidity facility, in the amount of Euro 13.1 billion (31 December 2020: Euro 13.1 billion);
• Securities pledged as collateral to the Portuguese Securities and Exchange Commission (“Comissão
do Mercado de Valores Mobiliários” (CMVM)) in the scope of the Investors Indemnity System
(“Sistema de Indemnização aos Investidores”), in the amount of Euro 7.9 million (31 December
2020: Euro 8.1 million);
• Securities pledged as collateral to the Deposits’ Guarantee Fund (“Fundo de Garantia de Depósitos”),
in the amount of Euro 66.1 million (31 December 2020: Euro 69.5 million);
• Securities pledged as collateral to the European Investment Bank, in the amount of Euro 651.4
million (31 December 2020: Euro 769.7 million);
• Securities delivered as collateral in connection with derivatives trading with a central counterparty
in the amount of Euro 100.5 million (31 December 2020: Euro 107.0 million);
• Deposits delivered as collateral in connection with derivatives trading with a central counterparty in
the amount of Euro 100.0 million (31 December 2020: Euro 100.0 million).
under the terms and conditions of the contracts celebrated. The increase in the value of securities
pledged as collateral to the European Investment Bank is related to the reinforcement of the collateral
due to changes in the minimum required amounts.
Documentary credits are irrevocable commitments made by the Bank, on behalf of its customers, to
pay or order to pay a certain amount to a supplier of goods or services, within a determined period,
upon the presentation of documentation of the expedition of the goods or rendering of the services.
The condition of “irrevocable” derives from the fact that they may not be cancelled neither changed
without the agreement of all involved parties.
Revocable and irrevocable commitments represent contractual agreements to extend credit to
customers of the Bank (e.g. undrawn credit lines), which are, generally, contracted for fixed periods
of time or with other expiration conditions and, usually, require the payment of a fee. Almost all credit
commitments in force require that customers continue meeting certain conditions that were verified at
the time the credit was contracted.
Despite the characteristics of these contingent liabilities and commitments, these operations require
a previous rigorous risk assessment of the solvency of the customer and of its business, similarly to
any other commercial operation. When necessary, the Bank requires the collateralisation of these
transactions. Since it is expected that the majority of these operations will mature without any funds
having been drawn, these amounts do not necessarily represent future cash out-flows.
Additionally, liabilities recorded in off-balance sheet items related to banking services provided are as
follows:
The above-mentioned financial assets pledged as collateral are recorded in the various asset categories
of the Bank’s balance sheet and may be executed in the event the Bank does not fulfil its obligations
Additionally, liabilities recorded in off-balance sheet items related to banking services provided are as follows:
Deposit and custody of securities and other items
Amounts received for subsequent collection
Securitized loans under management (servicing)
Other responsibilities related with banking services
(in thousands of Euros)
31.12.2021
31.12.2020
31 812 211
197 907
2 018 237
537 957
35 774 785
233 938
2 118 806
1 838 050
34 566 312
39 965 579
Pursuant to the resolution measure applied to BES by resolution of Bank of Portugal of 3 August 2014 (point 1., point b), subparagraph
(vii) of Annex 2), as amended by the decision of Bank of Portugal of 11 August 2014, the “excluded liabilities” of transfer to novobanco
include “any obligations, guarantees, liabilities or contingencies assumed in the commercialization, financial intermediation and
distribution of debt instruments issued by entities that are part of the Espírito Santo Group (…) ”.
Pursuant to the resolution measure applied to BES by resolution of Bank of Portugal of 3 August 2014
(point 1., point b), subparagraph (vii) of Annex 2), as amended by the decision of Bank of Portugal of 11
August 2014, the “excluded liabilities” of transfer to novobanco include “any obligations, guarantees,
liabilities or contingencies assumed in the commercialization, financial intermediation and distribution
of debt instruments issued by entities that are part of the Espírito Santo Group (…) ”.
On 29 December 2015, Bank of Portugal adopted a new deliberation for the “Clarification and
retransmission of liabilities and contingencies defined as excluded liabilities in subparagraphs (v)
through (vii) of paragraph (b) of No. 1 of Appendix 2 of the Deliberation of Bank of Portugal of 3 August
2014 (8 p.m.), with the wording given it by the Deliberation of Bank of Portugal of 11 August 2014 (5
p.m.)”. Through this deliberation, Bank of Portugal:
Pursuant to point and subparagraph above and subpoint (v), liabilities excluded also include “any liabilities or contingencies, namely
those arising from fraud or violation of regulatory, criminal or administrative offenses or provisions”.
Pursuant to point and subparagraph above and subpoint (v), liabilities excluded also include “any
liabilities or contingencies, namely those arising from fraud or violation of regulatory, criminal or
administrative offenses or provisions”.
On 29 December 2015, Bank of Portugal adopted a new deliberation for the “Clarification and retransmission of liabilities and
contingencies defined as excluded liabilities in subparagraphs (v) through (vii) of paragraph (b) of No. 1 of Appendix 2 of the
Deliberation of Bank of Portugal of 3 August 2014 (8 p.m.), with the wording given it by the Deliberation of Bank of Portugal of 11
August 2014 (5 p.m.)”. Through this deliberation, Bank of Portugal:
i. Clarified the treatment as excluded liabilities of the contingent and unknown liabilities of BES
(including litigation liabilities related to pending litigation and liabilities or contingencies arising from
fraud or violation of rules or regulatory, criminal or administrative offence decisions), regardless of
(i) Clarified the treatment as excluded liabilities of the contingent and unknown liabilities of BES (including litigation liabilities
related to pending litigation and liabilities or contingencies arising from fraud or violation of rules or regulatory, criminal or
administrative offence decisions), regardless of their nature (tax, labour, civil or other) and whether or not these are recorded
in the accounts of BES, in accordance with subparagraph (v) of paragraph (b) of No. 1 of Appendix 2 of the Deliberation of
3 August; and
395
(ii) Clarified that the following liabilities had not been transferred from BES to novobanco:
a. All the liabilities relating to Preference Shares issued by vehicle companies established by BES and sold by BES;
b. All liabilities, damages and expenses related to real estate assets that were transferred to novobanco;
c. All indemnities related to breach of contracts (purchase and sale of real estate assets and others) signed and celebrated
d. All indemnities related to life insurance contracts, in which the insurer was BES - Companhia de Seguros de Vida, S.A.;
e. All liabilities and indemnities related to the alleged annulment of certain clauses in loan agreements in which BES was
f. All the indemnities and liabilities arising from the cancellation of operations carried out by BES whilst financial and
before 8 p.m. on 3 August 2014;
the lender;
investment service provider; and
g. Any liability that is the object of any of the processes described in Appendix I of said deliberation.
(iii) To the extent that, despite the clarifications made above, it is found that there has been an effective transfer of any liabilities
from BES to novobanco which, in terms of any of those paragraphs and the Deliberation of 3 August, should have remained
in BES’s legal sphere, said liabilities will be retransmitted from novobanco to BES, with effect as at 8 p.m. of 3 August 2014.
In the preparation of its separate and consolidated financial statements as of 31 December 2021 (as well as in the previous financial
statements), novobanco incorporated the decisions resulting from the referred resolution measure regarding the transfer of the
assets, liabilities, off-balance sheet items and assets under management of BES, as well as from the deliberation of 29 December
2015 of Bank of Portugal, in particular, with regards to the clarification of the non-transmission to novobanco of contingent and
unknown liabilities as well as the clarifications relating to the liabilities listed in paragraph (ii) above, herein also including the lawsuits
listed in said deliberation.
In addition, also by the deliberation of Bank of Portugal of 29 December 2015, it was decided that it is the responsibility of Resolution
Fund to neutralize, at the Bank level, the effects of decisions that are legally binding, beyond the control of novobanco and to which
it did not contribute and that, simultaneously, translate into the materialization of liabilities and contingencies which, according to the
perimeter of the transfer to novobanco as defined by Bank of Portugal, should remain in BES’s scope or give rise to the setting of
indemnities in the scope of the implementation of court sentences annulling decisions adopted by Bank of Portugal.
Considering that the establishment of the Bank results from the application of a resolution measure to BES, which had a significant
impact on the net worth of third parties, and notwithstanding the deliberations of Bank of Portugal of 29 December 2015, there are
still relevant litigation risks, although mitigated, namely regarding the various disputes relating to the loan made by Oak Finance to
BES and regarding the senior bond issues retransmitted to BES, as well as the risk of the non-recognition and/or non-implementation
of the various decisions of Bank of Portugal by Portuguese or foreign courts (as it is the case of the courts in Spain) in disputes
related to the perimeter of the assets, liabilities, off-balance sheet items and assets under management transferred to novobanco.
These disputes include the two lawsuits of late January 2016, with the Supreme Court of Justice of Venezuela, Banco de Desarrollo
Económico y Social de Venezuela and the Fondo de Desarrollo Nacional against BES and novobanco, relating to the sale of debt
instruments issued by entities belonging to the Espírito Santo Group, in the amount of 37 million dollars and 335 million dollars,
respectively, and which requests the reimbursement of the amount invested, plus interest, compensation for the value of inflation and
costs (in a total estimated amount by the claimants of 96 and 871 million dollars, respectively). In accordance with resolution measure,
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
their nature (tax, labour, civil or other) and whether or not these are recorded in the accounts of BES,
in accordance with subparagraph (v) of paragraph (b) of No. 1 of Appendix 2 of the Deliberation of 3
August; and
ii. Clarified that the following liabilities had not been transferred from BES to novobanco:
a. All the liabilities relating to Preference Shares issued by vehicle companies established by BES
and sold by BES;
b. All liabilities, damages and expenses related to real estate assets that were transferred to
novobanco;
c. All indemnities related to breach of contracts (purchase and sale of real estate assets and others)
signed and celebrated before 8 p.m. on 3 August 2014;
d. All indemnities related to life insurance contracts, in which the insurer was BES - Companhia de
Seguros de Vida, S.A.;
e. All liabilities and indemnities related to the alleged annulment of certain clauses in loan agreements
in which BES was the lender;
f. All the indemnities and liabilities arising from the cancellation of operations carried out by BES
whilst financial and investment service provider; and
g. Any liability that is the object of any of the processes described in Appendix I of said deliberation.
iii. To the extent that, despite the clarifications made above, it is found that there has been an effective
transfer of any liabilities from BES to novobanco which, in terms of any of those paragraphs and
the Deliberation of 3 August, should have remained in BES’s legal sphere, said liabilities will be
retransmitted from novobanco to BES, with effect as at 8 p.m. of 3 August 2014.
In the preparation of its separate and consolidated financial statements as of 31 December 2021 (as
well as in the previous financial statements), novobanco incorporated the decisions resulting from the
referred resolution measure regarding the transfer of the assets, liabilities, off-balance sheet items
and assets under management of BES, as well as from the deliberation of 29 December 2015 of Bank
of Portugal, in particular, with regards to the clarification of the non-transmission to novobanco of
contingent and unknown liabilities as well as the clarifications relating to the liabilities listed in paragraph
(ii) above, herein also including the lawsuits listed in said deliberation.
In addition, also by the deliberation of Bank of Portugal of 29 December 2015, it was decided that it
is the responsibility of Resolution Fund to neutralize, at the Bank level, the effects of decisions that
are legally binding, beyond the control of novobanco and to which it did not contribute and that,
simultaneously, translate into the materialization of liabilities and contingencies which, according to
the perimeter of the transfer to novobanco as defined by Bank of Portugal, should remain in BES’s
scope or give rise to the setting of indemnities in the scope of the implementation of court sentences
annulling decisions adopted by Bank of Portugal.
Considering that the establishment of the Bank results from the application of a resolution measure
to BES, which had a significant impact on the net worth of third parties, and notwithstanding the
deliberations of Bank of Portugal of 29 December 2015, there are still relevant litigation risks, although
mitigated, namely regarding the various disputes relating to the loan made by Oak Finance to BES and
regarding the senior bond issues retransmitted to BES, as well as the risk of the non-recognition and/
or non-implementation of the various decisions of Bank of Portugal by Portuguese or foreign courts
(as it is the case of the courts in Spain) in disputes related to the perimeter of the assets, liabilities,
off-balance sheet items and assets under management transferred to novobanco. These disputes
include the two lawsuits of late January 2016, with the Supreme Court of Justice of Venezuela, Banco
de Desarrollo Económico y Social de Venezuela and the Fondo de Desarrollo Nacional against BES and
novobanco, relating to the sale of debt instruments issued by entities belonging to the Espírito Santo
Group, in the amount of 37 million dollars and 335 million dollars, respectively, and which requests the
reimbursement of the amount invested, plus interest, compensation for the value of inflation and costs
(in a total estimated amount by the claimants of 96 and 871 million dollars, respectively). In accordance
with resolution measure, these responsibilities were not transferred to novobanco and the main actions
and precautionary seizure procedures are still pending before the Supreme Court of Venezuela.
In the preparation of the separate and consolidated financial statements of the Bank as of 31 December
2021, the Executive Board of Directors reflected the Resolution Deliberation and related decisions
made by Bank of Portugal, in particular the decisions of 29 December 2015. In this context, the present
financial statements, namely in what regards the provisions for contingencies arising from lawsuits,
reflect the exact perimeter of the assets, liabilities, off-balance sheet elements and assets under
management and liabilities transferred from BES to novobanco, as determined by Bank of Portugal and
taking as reference the current legal bases and the information available at the present date.
Additionally, within the scope of the novobanco sale operation, concluded on October 18, 2017, the
respective contractual documents contain specific provisions that produce effects equivalent to
the resolution of the Board of Directors of Bank of Portugal, of December 29, 2015, regarding the
neutralization, at the level of novobanco, of the effects of unfavourable decisions that are legally binding,
although, now, with contractual origin, thus maintaining the framework of contingent responsibilities
of the Resolution Fund.
Relevant disputes
For the purposes of contingent liabilities, and without prejudice to the information contained in these
notes to the accounts, namely with regard to the conformity of the policy of setting up provisions with
the resolution measure and subsequent decisions of Bank of Portugal (and criteria for the allocation
of responsibilities and contingencies arising therefrom), it is also necessary to identify the following
disputes whose effects or impacts on the financial statements of novobanco GROUP are, at the present
date, insusceptible to determine or quantify:
i. Legal action brought by Partran, SGPS, S.A., Massa Insolvente by Espírito Santo Financial Group, S.A.
and Massa Insolvente by Espírito Santo Financial (Portugal), S.A. against novobanco and Calm Eagle
Holdings, S.A.R.L. through which it is intended the declaration of nullity of the pledge constituted
on the shares of Companhia de Seguros Tranquilidade, S.A. and, alternatively, the annulment of the
pledge or the declaration of its ineffectiveness;
396
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes ii. Lawsuit filed by novobanco to challenge the resolution in favour of the insolvent estate of the acts
of incorporation and subsequent execution of the pledge on the shares of Companhia de Seguros
Tranquilidade, SA, declared by the insolvency administrator of Partran, SGPS, SA, considering that
there are no grounds for the resolution of the aforementioned acts, as well as for the return of the
amounts received as a price (Euro 25 million corresponding to the initial price and the respective
positive adjustments) for the sale of the shares of Companhia de Seguros Tranquilidade, SA.
novobanco has judicially challenged the resolution act, running the process attached to the
insolvency process of Partran, SGPS, SA;
iii. Lawsuits brought after the execution of the contract for the purchase and sale of NOVO BANCO’s
share capital, signed between the Resolution Fund and Lone Star on March 31, 2017, related to
the conditions of the sale, namely the lawsuit administrative action brought by Banco Comercial
Português, SA against the Resolution Fund, of which novobanco is not a party and, under which,
according to the public disclosure of privileged information made by BCP on the CMVM website on
September 1, 2017, the legal assessment of the contingent capitalization obligation assumed by the
Resolution Fund within the scope of the CCA is requested;
Resolution Fund
Resolution Fund is a public legal entity with administrative and financial autonomy, created by Decree-
Law No. 31-A/2012, of 10 February, which is governed by the RGICSF and by its internal regulation,
having as its mission to provide financial support for the resolution measures implemented by Bank of
Portugal, whilst national resolution authority, and to carry out all the other functions conferred by law
in the scope of the execution of such measures.
The Bank, as with the generality of the financial institutions operating in Portugal, is one of the
institutions participating in Resolution Fund, making contributions that result from the application of
a rate defined annually by Bank of Portugal, based, essentially, on the amount of its liabilities. As of 31
December 2021 the periodic contribution made by the Bank amounted to Euro 14,854 thousand (31
December 2020: Euro 12,528 thousand).
Within the scope of its responsibility as a supervisory and resolution authority, Bank of Portugal, on
August 3, 2014, decided to apply a resolution measure to BES, pursuant to paragraph 5 of article 145-
G of the General Regime of Institutions Credit and Financial Companies (RGICSF), which consisted of
transferring most of its activity to novobanco, created especially for this purpose, with the capitalization
being ensured by the Resolution Fund.
For the realization of novobanco’s share capital, the Resolution Fund made available Euro 4,900 million,
of which Euro 365 million corresponded to its own financial resources. A loan from a banking syndicate
was also granted to the Resolution Fund, in the amount of Euro 635 million, with the participation of
each credit institution being weighted according to several factors, including the respective size. The
remaining amount (Euro 3,900 million) originated from a loan granted by the Portuguese State.
In December 2015, national authorities decided to sell most of the assets and liabilities associated
with the activity of Banif - Banco Internacional do Funchal, SA (BANIF) to Banco Santander Totta, S.A.
(Santander Totta), for Euro 150 million, also in the scope of the application of a resolution measure. In
the context of this resolution measure, the assets of Banif identified as problematic were transferred
to an asset management vehicle, created for the purpose – Oitante, S.A.. This operation involved public
support estimated at Euro 2,255 million, which aimed to cover future contingencies, financed at Euro
489 million by the Resolution Fund and Euro 1,766 million directly by the Portuguese State.
The situation of serious financial imbalance in which BES was in 2014 and BANIF in 2015, which justified
the application of resolution measures, created uncertainties related to the risk of litigation involving
the Resolution Fund, which is significant, as well as with the risk of an eventual insufficiency of resources
to ensure the fulfilment of the liabilities, in particular the short-term repayment of the borrowings.
It was in this context that, in the second half of 2016, the Portuguese Government reached an agreement
with the European Commission to change the terms of the financing granted by the Portuguese State
and by the banks participating in Resolution Fund in order to preserve its financial stability, through the
promotion of conditions that endow predictability and stability of the contributory efforts to Resolution
Fund. To this end, an addendum to the financing agreements with Resolution Fund was formalised,
which introduced a number of changes to the repayment schedule, remuneration rates and other terms
and conditions associated with said loans such that these are adjusted to Resolution Fund’s ability to
fully meet its obligations based on its regular revenues, that is, without the need to charge the banks
participating in Resolution Fund for special contributions or any other extraordinary contribution.
According to the statement of the Resolution Fund of March 21, 2017, issued following an earlier
statement of September 28, 2016 and the statement of the Ministry of Finance issued on the same
date, the revision of the conditions of financing granted by the State Portuguese and participating
banks aimed to ensure the sustainability and financial balance of the Resolution Fund, based on a
stable, predictable and affordable charge for the banking sector. Based on this review, the Resolution
Fund assumed that the full payment of its liabilities is ensured, as well as the respective remuneration,
without the need for recourse to special contributions or any other type of extraordinary contributions
by the banking sector.
On March 31, 2017, Bank of Portugal announced that it had selected the Lone Star Fund for the
purchase of novobanco, which was completed on October 18, 2017, through the injection, by the new
shareholder, of Euro 750 million, which was followed by a new a capital contribution of Euro 250 million,
made on December 21, 2017. The Lone Star Fund now holds 75% of NOVO BANCO’s share capital and
the Resolution Fund the remaining 25%. Additionally, the approved conditions include:
• A contingent capitalization mechanism, under which the Resolution Fund may be called upon to make
payments in the event of certain cumulative conditions materializing, related to: (i) the performance
of a restricted set of assets of novobanco and (ii) the evolution of the Bank’s capitalization levels.
Any payments to be made under this contingent mechanism are subject to an absolute ceiling of
EUR 3,890 million;
• An indemnity mechanism to novobanco, if certain conditions are met, it will be sentenced to pay any
liability, by a final judicial decision that does not recognize or is contrary to the resolution measure
applied by Bank of Portugal, or to the perimeter novobanco’s assets and liabilities.
397
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes NOTA 36 – RELATED PARTIES BALANCES AND TRANSACTIONS
Notwithstanding the possibility under the applicable
legislation for the collection of special
contributions, in light of the renegotiation of the conditions of the loans granted to Resolution Fund
by the Portuguese State and by a syndicate of banks, and of the public press releases made by the
Resolution Fund and the Office of the Finance Minister stating that this possibility is not to be used, the
present financial statements reflect the expectation of the Board of Directors that the Bank will not be
required to make special contributions or any other type of extraordinary contributions to finance the
resolution measures applied to BES and BANIF, as well as the Contingent Capital Agreement and the
Compensation Mechanism referred to in the previous paragraphs.
The group of entities considered to be related parties by novobanco in accordance with the IAS 24 definitions, are (i) key
management personnel (members of the Executive Board of Directors and members of the General Supervisory Board of
novobanco); (ii) people or entities with a family, legal or business relationship with key management personnel; (iii) people or entities
with a family, legal or business relationship with shareholders; (iv) shareholders holding direct or indirect stakes equal to or exceeding
2% of the share capital or voting rights of novobanco; (v) subsidiaries consolidated for accounting purposes under the full
consolidation method; (vi) associated companies, that is, companies over which novobanco has significantly influence on the
company’s financial and operational polices, despite not having control; and (vii) entities under joint control of novobanco (joint
ventures).
NOTA 36 – RELATED PARTIES BALANCES AND
TRANSACTIONS
The group of entities considered to be related parties by novobanco in accordance with the IAS 24
definitions, are (i) key management personnel (members of the Executive Board of Directors and
members of the General Supervisory Board of novobanco); (ii) people or entities with a family, legal
or business relationship with key management personnel; (iii) people or entities with a family, legal
or business relationship with shareholders; (iv) shareholders holding direct or indirect stakes equal to
or exceeding 2% of the share capital or voting rights of novobanco; (v) subsidiaries consolidated for
accounting purposes under the full consolidation method; (vi) associated companies, that is, companies
over which novobanco has significantly influence on the company’s financial and operational polices,
despite not having control; and (vii) entities under joint control of novobanco (joint ventures).
Any changes in this regard and the application of these mechanisms may have relevant implications in
the Bank’s financial statements.
During 2021, the following transactions with Related Parties identified on 31 December 2021 (credit and other types) were carried
out:
During 2021, the following transactions with Related Parties identified on 31 December 2021 (credit
and other types) were carried out:
1) Credit Operations
1) Credit Operations
Entities / Individuals
Category
BEST
Banco Electrónico de Serviço Total S.A.
novobanco Group
EDENRED - Portugal S.A.
novobanco Group
LOCARENT - Companhia Portuguesa Aluguer Viaturas S.A.
novobanco Group
LOCARENT - Companhia Portuguesa Aluguer Viaturas S.A.
novobanco Group
Operation
Bank guarantee
Bank guarantee
Direct Debits Limits (RCE) (renewal)
Credit Card Limits (renewal)
Credit Card Limits (renewal)
Current Account Loan Account (renewal)
Trading Room Operations (RCE)
Direct Debits Limits (RCE) (renewal)
Leasing (renewal and reduction)
Leasing (renewal)
Commercial Paper (renewal)
Commercial Paper (renewal)
Commercial Paper (renewal)
Commercial Paper (renewal)
Novobanco dos Açores
Novo Banco Group
(BEST, NB Açores e NB Finance)
Common Management and/or
Supervisory Members
Common Management and/or
Supervisory Members
Full subscription of the issue of Senior Debt Securities (non-
preferred) at the novobanco dos Açores by novobanco
• Interbank Limits (Trading Room Operations)
• Commercial Limits
Unicre - Cartão Internacional de Crédito S.A.
novobanco Group
Current Account Loan Account
Current Account Loan Account
Amount (Euro)
8 090 174
41 359 876
410 000
24 000
10 000
2 500 000
3 000 000
4 000 000
25 000 000
43 250 000
1 000 000
4 500 000
23 000 000
50 000 000
5 000 000
1 400 000 000
18 000 000
Up to 10 000 000
2) Services rendered and other signed contracts
Reformulation of 3 Current Account Loans (renewal)
20 050 000
Entities / Individuals
Category
Operation
GNB Gestão de Ativos
novobanco Group
Intra Group Services Agreement
GNB Soc Gestora de Fundo de Pensões S.A.
novobanco Group
Real Estate Transaction
Amount
(Euro)
na
22 932 300
398
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTA 36 – RELATED PARTIES BALANCES AND TRANSACTIONS
The group of entities considered to be related parties by novobanco in accordance with the IAS 24 definitions, are (i) key
management personnel (members of the Executive Board of Directors and members of the General Supervisory Board of
novobanco); (ii) people or entities with a family, legal or business relationship with key management personnel; (iii) people or entities
with a family, legal or business relationship with shareholders; (iv) shareholders holding direct or indirect stakes equal to or exceeding
2% of the share capital or voting rights of novobanco; (v) subsidiaries consolidated for accounting purposes under the full
consolidation method; (vi) associated companies, that is, companies over which novobanco has significantly influence on the
company’s financial and operational polices, despite not having control; and (vii) entities under joint control of novobanco (joint
During 2021, the following transactions with Related Parties identified on 31 December 2021 (credit and other types) were carried
ventures).
out:
1) Credit Operations
Entities / Individuals
Category
Amount (Euro)
BEST
Banco Electrónico de Serviço Total S.A.
novobanco Group
EDENRED - Portugal S.A.
novobanco Group
LOCARENT - Companhia Portuguesa Aluguer Viaturas S.A.
novobanco Group
LOCARENT - Companhia Portuguesa Aluguer Viaturas S.A.
novobanco Group
Operation
Bank guarantee
Bank guarantee
Direct Debits Limits (RCE) (renewal)
Credit Card Limits (renewal)
Credit Card Limits (renewal)
Current Account Loan Account (renewal)
Trading Room Operations (RCE)
Direct Debits Limits (RCE) (renewal)
Leasing (renewal and reduction)
Leasing (renewal)
Commercial Paper (renewal)
Commercial Paper (renewal)
Commercial Paper (renewal)
Commercial Paper (renewal)
Novobanco dos Açores
Novo Banco Group
(BEST, NB Açores e NB Finance)
Common Management and/or
Supervisory Members
Common Management and/or
Supervisory Members
Full subscription of the issue of Senior Debt Securities (non-
preferred) at the novobanco dos Açores by novobanco
• Interbank Limits (Trading Room Operations)
• Commercial Limits
Unicre - Cartão Internacional de Crédito S.A.
novobanco Group
Current Account Loan Account
Current Account Loan Account
8 090 174
41 359 876
410 000
24 000
10 000
2 500 000
3 000 000
4 000 000
25 000 000
43 250 000
1 000 000
4 500 000
23 000 000
50 000 000
5 000 000
1 400 000 000
18 000 000
Up to 10 000 000
2) Services rendered and other signed contracts
2) Services rendered and other signed contracts
Reformulation of 3 Current Account Loans (renewal)
20 050 000
Entities / Individuals
Category
Operation
GNB Gestão de Ativos
novobanco Group
Intra Group Services Agreement
GNB Soc Gestora de Fundo de Pensões S.A.
novobanco Group
Real Estate Transaction
Amount
(Euro)
na
22 932 300
The Bank balances with related parties as at 31 December 2021 and 2020, as well as the respective
profit and losses, can be summarized as follows:
The Bank balances with related parties as at 31 December 2021 and 2020, as well as the respective profit and losses, can be
summarized as follows:
Assets
Liabilities
Guarantees
Income
Expenses
Assets
Liabilities
Guarantees
Income
Expenses
31.12.2021
31.12.2020
(in thousands of Euros)
Shareholders
NANI HOLDINGS
FUNDO DE RESOLUÇÃO
Subsidiary companies
GNB RECUPERAÇÃO DE CRÉDITO
GNB CONCESSÕES
GNB ACE
GNB GA
NOVO BANCO SERVICIOS
ES TECH VENTURES
BEST
NB AÇORES
FCR PME
SPE-LM6
SPE-LM7
FCR NB GROWTH
NB ÁFRICA
NOVO VANGUARDA
FUNGEPI
FUNGEPI_II
FUNGERE
IMOINVESTIMENTO
PREDILOC
IMOGESTÃO
ARRABIDA
INVESFUNDO VII
NB LOGÍSTICA
NB PATRIMÓNIO
FUNDES
AMOREIRAS
FIMES ORIENTE
NB ARRENDAMENTO
NB FINANCE
ASAS INVEST
FEBAGRI
AUTODRIL
GREENWOODS
QUINTA DA AREIA
VÁRZEA DA LAGOA
HERDADE DA BOINA
RIBAGOLFE
BENAGIL
IMOASCAY
QUINTA DA RIBEIRA
PROMOFUNDO
GREENDRAIVE
FIVE STARS
Associated Companies
LINEAS
LOCARENT
ESEGUR
UNICRE
MULTIPESSOAL
OTHERS
Other related entities
HUDSON ADVISORS PORTUGAL
NACIONAL CONTA LDA
INFRAMOURA
ESMALGLASS
MARINA VILAMOURA
Other
78
-
209 220
-
83 473
-
2 261
-
46 732
1 716
145 649
-
268 623
797 831
15 050
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6 445
-
1 577 018
-
121 982
1 894
38 193
2 017
1
164 087
-
375
-
-
-
375
153
11 040
-
39 264
-
73 201
-
70 348
605 863
204 898
218
1 909
4 586
3 357
7 145
-
25 614
84 523
57 841
3 196
2 668
38 787
2 553
1 088
29 741
60 365
16 796
30 168
13 948
797
6 968
-
913
63
3 156
7
42
6
49
101
-
247
124
252
4 634
1 406 629
3 123
3 146
919
6
43
76 197
83 434
-
18
-
100
-
118
-
-
332
-
-
25 894
-
598 312
153
-
-
-
332
-
-
-
-
6
-
-
37
102 503
-
-
-
-
-
-
1 232
35
1 182
-
-
-
-
-
-
-
-
-
-
-
1 820
-
71
-
-
-
-
-
-
-
-
-
-
106
-
106 992
-
-
915
-
273
-
1 188
-
-
-
2
-
2
-
-
-
6 486
-
2 250
967
-
287
985
-
-
-
45
5 681
28
25
-
-
-
4
-
-
-
-
-
-
16
-
-
-
-
-
-
-
-
-
-
-
-
-
4 811
21 917
2 395
1 040
-
522
-
2 039
5 996
-
-
-
-
-
-
42
-
-
-
-
3 112
1 381
-
-
-
-
-
-
83
3 631
4
-
-
3
1
-
3
4 433
1
-
1
-
331
-
-
-
-
-
-
-
-
-
-
-
-
-
17 468
56 388
-
3 278
-
-
-
11
3 289
4 138
-
-
-
-
4 138
-
83 473
-
1 723
18 511
48 738
973
139 435
-
286 687
869 975
15 414
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4 923
-
2 068 182
64 933
115 832
2 955
22 597
2 030
2
208 349
-
295
114
-
-
409
257
39 339
-
73 536
23
69 809
577 185
159 509
1 007
2 902
5 490
3 562
7 185
162
60 942
81 394
41 699
922
2 649
36 427
3 633
1 216
28 707
35 911
12 625
31 824
13 753
1 025
8 770
571
925
89
1 761
-
-
5
10
312
624
187
230
58
-
1 306 388
6 505
633
1 650
49
31
64 816
73 684
-
52
16
107
1
176
-
-
-
6
-
-
37
102 458
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3 566
-
-
-
-
-
-
-
-
-
-
-
-
106
-
106 173
-
-
915
-
273
-
1 188
-
-
-
2
-
2
13
-
-
5 977
496
-
1 892
960
-
397
1 068
-
-
-
29
34
31
39
-
-
-
4
-
-
-
-
-
-
43
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11 315
2 871
1 081
-
289
31
1 982
6 254
-
-
-
-
-
-
-
12 528
1 761
-
1 479
-
12
-
4 368
1 873
-
-
-
-
-
261
7
7
4
-
-
6
1
-
1
4 447
1
-
2
-
4 625
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31 383
-
3 800
-
-
-
291
4 091
4 685
-
-
-
-
4 685
The amount of assets receivable from the Resolution Fund corresponds to the amount of the triggering of the Contingent Capital
Agreement regarding the financial years 2021 and 2020. The liability corresponds to the amount to be delivered to the Resolution
Fund arising from an addendum made in May 2021 to the Contingent Capitalization Mechanism contract.
In June 2018 a contract was entered into between NANI HOLDINGS, SGPS, S.A., LSF NANI INVESTMENTS S.à.r.l. and
novobanco, to provide support services for the preparation of consolidated information and regulatory reports.
The assets on the balance sheet related to associated companies included in the table above refer mainly to loans and advances,
and shareholder loans granted or debt securities acquired in the scope of the Bank’s activity. The liabilities relate mainly to bank
deposits taken.
The guarantees relating to associated undertakings included in the table above mainly refer to guarantees provided.
Related party transactions were carried out at arm's length, under similar terms and conditions, when compared with others carried
out with unrelated parties, and when these conditions were not verified, those exceptions were substantiated in accordance with the
Bank’s Related Party Transactions Policy.
All the loans granted to related parties are included in the impairment model, being subject to the determination of impairment in the
same manner as the commercial loans and advances granted by the Bank in the scope of its activity. All assets placed with related
parties earn interest between 0% and 6,24% (the rates correspond to the rates applied according to the original currency of the asset).
79
399
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The amount of assets receivable from the Resolution Fund corresponds to the amount of the triggering
of the Contingent Capital Agreement regarding the financial years 2021 and 2020. The liability
corresponds to the amount to be delivered to the Resolution Fund arising from an addendum made in
May 2021 to the Contingent Capitalization Mechanism contract.
In June 2018 a contract was entered into between NANI HOLDINGS, SGPS, S.A., LSF NANI INVESTMENTS
S.à.r.l. and novobanco, to provide support services for the preparation of consolidated information and
regulatory reports.
The assets on the balance sheet related to associated companies included in the table above refer
mainly to loans and advances, and shareholder loans granted or debt securities acquired in the scope
of the Bank’s activity. The liabilities relate mainly to bank deposits taken.
Related party transactions were carried out at arm’s length, under similar terms and conditions, when
compared with others carried out with unrelated parties, and when these conditions were not verified,
those exceptions were substantiated in accordance with the Bank’s Related Party Transactions Policy.
All the loans granted to related parties are included in the impairment model, being subject to the
determination of impairment in the same manner as the commercial loans and advances granted by
the Bank in the scope of its activity. All assets placed with related parties earn interest between 0%
and 6,24% (the rates correspond to the rates applied according to the original currency of the asset).
The costs with remunerations and other benefits granted to Key Management Personnel of novobanco
in 2021 and 2020, are as follows:
The guarantees relating to associated undertakings included in the table above mainly refer to
guarantees provided.
The costs with remunerations and other benefits granted to Key Management Personnel of novobanco in 2021 and 2020, are as
follows:
Short-term employment benefits
Post-employment benefits
Other long-term benefits
(in thousands of Euros)
Executive
Board of
Directors
31.12.2021
General and
Supervisory
Board
2 524
2
51
2 577
1 183
-
50
1 233
Executive
Board of
Directors
31.12.2020
General and
Supervisory
Board
2 676
3
33
2 712
993
-
8
1 001
Total
3 707
2
101
3 810
Total
3 669
3
41
3 713
In 2021 and 2020, the value of variable remuneration for the management bodies amounted to 1,600
thousand euros and 1,860 thousand euros, respectively, which relates to remuneration that does not
constitute vested rights of the respective members until after the end of the restructuring period and
is subject to deferral and verification of certain conditions. Additionally, in 2020, costs of 320 thousand
euros were recorded as sign-on bonus resulting from the entry into office of a new executive director,
and compensation for termination of office of three executive directors was recorded in the amount of
206 thousand euros.
In 2021 and 2020, the value of variable remuneration for the management bodies amounted to 1,600 thousand euros and 1,860
thousand euros, respectively, which relates to remuneration that does not constitute vested rights of the respective members until
after the end of the restructuring period and is subject to deferral and verification of certain conditions. Additionally, in 2020, costs of
320 thousand euros were recorded as sign-on bonus resulting from the entry into office of a new executive director, and compensation
for termination of office of three executive directors was recorded in the amount of 206 thousand euros.
Deposits
(i) of members of the Executive Board of Directors and their direct relatives was Euro 1,080 thousand
(31 December 2020: Euro 1,312 thousand); and (ii) of members of the General and Supervisory Board
and their direct relatives was Euro 1,562 thousand (31 December 2020: Euro 1,293 thousand).
As at 31 December 2021 and 2020, the value of loans and deposits of members of the Key Management Personnel of the novobanco
was as follows:
As at 31 December 2021 and 2020, the value of loans and deposits of members of the Key Management
Personnel of the novobanco was as follows:
Credit granted
(i) to members of the Executive Board of Directors and their direct relatives was Euro 317 thousand (31 December 2020: Euro 331
thousand); and (ii) members of the General and Supervisory Board and their direct relatives had no credit liabilities (31 December
2020: no exposure).
NOTA 37 – SECURITISATION OF ASSETS
As at 31 December 2021 e 2020, the outstanding securitization transactions made by the Bank were
as follows:
Credit granted
(i) to members of the Executive Board of Directors and their direct relatives was Euro 317 thousand (31
December 2020: Euro 331 thousand); and (ii) members of the General and Supervisory Board and their
direct relatives had no credit liabilities (31 December 2020: no exposure).
Deposits
(i) of members of the Executive Board of Directors and their direct relatives was Euro 1,080 thousand (31 December 2020: Euro
1,312 thousand); and (ii) of members of the General and Supervisory Board and their direct relatives was Euro 1,562 thousand (31
December 2020: Euro 1,293 thousand).
400
80
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The main characteristics of these operations, as at 31 December 2021 and 2020, may be analyzed as follows:
The main characteristics of these operations, as at 31 December 2021 and 2020, may be analyzed as follows:
The main characteristics of these operations, as at 31 December 2021 and 2020, may be analyzed as follows:
NOTA 37 – SECURITISATION OF ASSETS
NOTA 37 – SECURITISATION OF ASSETS
As at 31 December 2021 e 2020, the outstanding securitization transactions made by the Bank were as follows:
As at 31 December 2021 e 2020, the outstanding securitization transactions made by the Bank were as follows:
Issue
Issue
Start date
Start date
Original amount
Original amount
Current amount
Current amount
31.12.2021
31.12.2021
31.12.2020
31.12.2020
(in thousands of Euros)
(in thousands of Euros)
Asset securitized
Asset securitized
Lusitano Mortgages No.4 plc
Lusitano Mortgages No.4 plc
Lusitano Mortgages No.5 plc
Lusitano Mortgages No.5 plc
Lusitano Mortgages No.6 plc
Lusitano Mortgages No.6 plc
Lusitano Mortgages No.7 plc
Lusitano Mortgages No.7 plc
September 2005
September 2005
September 2006
September 2006
July 2007
July 2007
September 2008
September 2008
1 200 000
1 200 000
1 400 000
1 400 000
1 100 000
1 100 000
1 900 000
1 900 000
246 943
246 943
373 147
373 147
355 513
355 513
907 327
907 327
280 051 Mortgage loan (general regime)
280 051 Mortgage loan (general regime)
417 854 Mortgage loan (general regime)
417 854 Mortgage loan (general regime)
396 083 Mortgage loan (general regime)
396 083 Mortgage loan (general regime)
1 003 303 Mortgage loan (general regime)
1 003 303 Mortgage loan (general regime)
Current
nominal
Current
value
nominal
value
Interest held
by Group
Interest held
(Nominal
by Group
value)
(Nominal
value)
31.12.2021
31.12.2021
Interest held
by Group
Interest held
(Book value)
by Group
(Book value)
Maturity date
Maturity date
Initial rating of the bonds
Current rating of the bonds
Initial rating of the bonds
Current rating of the bonds
Fitch Moody's
S&P
DBRS
Fitch Moody's
S&P
DBRS
Fitch Moody's
Fitch Moody's
Issue
Issue
Bonds issued
Bonds issued
Lusitano Mortgages No.4 plc
Lusitano Mortgages No.4 plc
Lusitano Mortgages No.5 plc
Lusitano Mortgages No.5 plc
Lusitano Mortgages No.6 plc
Lusitano Mortgages No.6 plc
Lusitano Mortgages No.7 plc
Lusitano Mortgages No.7 plc
Classe A
Classe B
Classe A
Classe C
Classe B
Classe D
Classe C
Classe E
Classe D
Classe E
Classe A
Classe B
Classe A
Classe C
Classe B
Classe D
Classe C
Classe E
Classe D
Classe E
Classe A
Classe B
Classe A
Classe C
Classe B
Classe D
Classe C
Classe E
Classe D
Classe F
Classe E
Classe F
Classe A
Classe B
Classe A
Classe C
Classe B
Classe D
Classe C
Classe D
Initial
nominal
Initial
value
nominal
value
1 134 000
22 800
1 134 000
19 200
22 800
24 000
19 200
10 200
24 000
10 200
1 323 000
26 600
1 323 000
22 400
26 600
28 000
22 400
11 900
28 000
11 900
943 250
65 450
943 250
41 800
65 450
17 600
41 800
31 900
17 600
22 000
31 900
22 000
1 425 000
294 500
1 425 000
180 500
294 500
57 000
180 500
57 000
189 071
12 515
189 071
10 539
12 515
13 174
10 539
5 100
13 174
5 100
277 689
22 729
277 689
19 141
22 729
23 926
19 141
11 301
23 926
11 301
189 723
65 450
189 723
41 800
65 450
17 600
41 800
31 900
17 600
22 000
31 900
22 000
437 435
294 500
437 435
180 500
294 500
57 000
180 500
57 000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
157 956
63 950
157 956
41 800
63 950
17 600
41 800
31 900
17 600
-
31 900
-
437 434
294 500
437 434
180 500
294 500
-
180 500
-
Issue
Issue
Bonds issued
Bonds issued
Initial
nominal
Initial
value
nominal
value
Current
nominal
Current
value
nominal
value
Interest held
by Group
Interest held
(Nominal
by Group
value)
(Nominal
value)
Lusitano Mortgages No.4 plc
Lusitano Mortgages No.4 plc
Lusitano Mortgages No.5 plc
Lusitano Mortgages No.5 plc
Lusitano Mortgages No.6 plc
Lusitano Mortgages No.6 plc
Lusitano Mortgages No.7 plc
Lusitano Mortgages No.7 plc
Classe A
Classe B
Classe A
Classe C
Classe B
Classe D
Classe C
Classe E
Classe D
Classe E
Classe A
Classe B
Classe A
Classe C
Classe B
Classe D
Classe C
Classe E
Classe D
Classe E
Classe A
Classe B
Classe A
Classe C
Classe B
Classe D
Classe C
Classe E
Classe D
Classe F
Classe E
Classe F
Classe A
Classe B
Classe A
Classe C
Classe B
Classe D
Classe C
Classe D
1 134 000
22 800
1 134 000
19 200
22 800
24 000
19 200
10 200
24 000
10 200
1 323 000
26 600
1 323 000
22 400
26 600
28 000
22 400
11 900
28 000
11 900
943 250
65 450
943 250
41 800
65 450
17 600
41 800
31 900
17 600
22 000
31 900
22 000
1 425 000
294 500
1 425 000
180 500
294 500
57 000
180 500
57 000
214 891
14 224
214 891
11 978
14 224
14 973
11 978
5 100
14 973
5 100
311 465
25 494
311 465
21 469
25 494
26 836
21 469
11 900
26 836
11 900
235 906
65 450
235 906
41 800
65 450
17 600
41 800
31 900
17 600
22 000
31 900
22 000
528 003
294 500
528 003
180 500
294 500
57 000
180 500
57 000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
188 337
63 950
188 337
41 800
63 950
17 600
41 800
31 900
17 600
-
31 900
-
528 003
294 500
528 003
180 500
294 500
-
180 500
-
(in thousands of Euros)
(in thousands of Euros)
S&P
AA
A-
AA
BBB-
A-
B-
BBB-
-
B-
-
AA
AA
AA
BBB
AA
B
BBB
-
B
-
A-
A-
A-
A-
A-
B
A-
D
B
-
D
-
AA
A
AA
-
A
-
-
-
DBRS
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
AAA
-
AAA
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
152 431
61 124
152 431
33 936
61 124
12 388
33 936
8 568
12 388
-
8 568
-
409 580
266 902
409 580
121 349
266 902
-
121 349
-
31.12.2020
31.12.2020
Interest held
by Group
Interest held
(Book value)
by Group
(Book value)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
180 754
52 775
180 754
32 562
52 775
11 906
32 562
8 458
11 906
-
8 458
-
488 778
265 146
488 778
116 051
265 146
-
116 051
-
December 2048 AAA
December 2048 AA
December 2048 AAA
December 2048 A+
December 2048 AA
December 2048 BBB+
December 2048 A+
December 2048 NA
December 2048 BBB+
December 2048 NA
December 2059 AAA
December 2059 AA
December 2059 AAA
December 2059 A
December 2059 AA
December 2059 BBB+
December 2059 A
December 2059 N/A
December 2059 BBB+
December 2059 N/A
March 2060 AAA
March 2060 AA
March 2060 AAA
March 2060 A
March 2060 AA
March 2060 BBB
March 2060 A
March 2060 BB
March 2060 BBB
March 2060 -
March 2060 BB
March 2060 -
October 2064 -
October 2064 -
October 2064 -
October 2064 -
October 2064 -
October 2064 -
October 2064 -
October 2064 -
December 2048 AAA
December 2048 AA
December 2048 AAA
December 2048 A+
December 2048 AA
December 2048 BBB+
December 2048 A+
December 2048 NA
December 2048 BBB+
December 2048 NA
December 2059 AAA
December 2059 AA
December 2059 AAA
December 2059 A
December 2059 AA
December 2059 BBB+
December 2059 A
December 2059 N/A
December 2059 BBB+
December 2059 N/A
March 2060 AAA
March 2060 AA
March 2060 AAA
March 2060 A
March 2060 AA
March 2060 BBB
March 2060 A
March 2060 BB
March 2060 BBB
March 2060 -
March 2060 BB
March 2060 -
October 2064 -
October 2064 -
October 2064 -
October 2064 -
October 2064 -
October 2064 -
October 2064 -
October 2064 -
Aaa
Aa2
Aaa
A1
Aa2
Baa1
A1
-
Baa1
-
Aaa
Aa2
Aaa
A1
Aa2
Baa2
A1
-
Baa2
-
Aaa
Aa3
Aaa
A3
Aa3
Baa3
A3
-
Baa3
-
-
-
-
-
-
-
-
-
-
-
Aaa
Aa2
Aaa
A1
Aa2
Baa1
A1
-
Baa1
-
Aaa
Aa2
Aaa
A1
Aa2
Baa2
A1
-
Baa2
-
Aaa
Aa3
Aaa
A3
Aa3
Baa3
A3
-
Baa3
-
-
-
-
-
-
-
-
-
-
-
S&P
AAA
AA
AAA
A+
AA
BBB-
A+
NA
BBB-
NA
AAA
AA
AAA
A
AA
BBB
A
N/A
BBB
N/A
AAA
AA
AAA
A
AA
BBB
A
BB
BBB
-
BB
-
AAA
BBB-
AAA
-
BBB-
-
-
-
DBRS
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
AAA
-
AAA
-
-
-
-
-
S&P
AAA
AA
AAA
A+
AA
BBB-
A+
NA
BBB-
NA
AAA
AA
AAA
A
AA
BBB
A
N/A
BBB
N/A
AAA
AA
AAA
A
AA
BBB
A
BB
BBB
-
BB
-
AAA
BBB-
AAA
-
BBB-
-
-
-
DBRS
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
AAA
-
AAA
-
-
-
-
-
A+
BBB+
A+
BB+
BBB+
CCC
BB+
-
CCC
-
A
BBB-
A
B
BBB-
CC
B
-
CC
-
AA
A
AA
BB-
A
CCC
BB-
CC
CCC
-
CC
-
-
-
-
-
-
-
-
-
BB
BB
BB
BB
BB
CCC
BB
-
CCC
-
BB
BB
BB
B
BB
CC
B
-
CC
-
A
BBB-
A
B
BBB-
CCC
B
CC
CCC
-
CC
-
-
-
-
-
-
-
-
-
Aa2
A2
Aa2
Ba1
A2
Caa1
Ba1
-
Caa1
-
Aa2
Baa2
Aa2
Ba3
Baa2
Caa3
Ba3
-
Caa3
-
Aa2
Aa2
Aa2
A3
Aa2
B3
A3
-
B3
-
-
-
-
-
-
-
-
-
-
-
Aa3
Baa1
Aa3
Ba3
Baa1
Caa3
Ba3
-
Caa3
-
A1
Baa3
A1
B3
Baa3
Ca
B3
-
Ca
-
Aa3
Baa1
Aa3
Ba3
Baa1
Caa3
Ba3
-
Caa3
-
-
-
-
-
-
-
-
-
-
-
(in thousands of Euros)
(in thousands of Euros)
Maturity date
Maturity date
Initial rating of the bonds
Current rating of the bonds
Initial rating of the bonds
Current rating of the bonds
Fitch Moody's
S&P
DBRS
Fitch Moody's
S&P
DBRS
Fitch Moody's
Fitch Moody's
S&P
AA
BB+
AA
B+
BB+
B-
B+
-
B-
-
AA
A
AA
BBB
A
B
BBB
-
B
-
A-
A-
A-
BBB+
A-
CCC
BBB+
D
CCC
-
D
-
AA
BBB
AA
-
BBB
-
-
-
DBRS
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
AAA
-
AAA
-
-
-
-
-
81
81
401
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
NOTA 38 – FAIR VALUE OF FINANCIAL ASSETS
AND LIABILITIES
The governance model of the valuation of the Bank’s financial instruments is defined in internal
regulations, which establish the policies and procedures to be followed in the identification and
valuation of financial instruments, the control procedures, and the definition of the responsibilities of
the parties involved in this process.
The fair value of listed financial assets is determined based on the closing price (bid-price), the price
of the last transaction made or the value of the last known price (bid). In the absence of a quotation,
the Bank estimates fair value using (i) valuation methodologies, such as the use of recent transaction
prices, similar and carried out under market conditions, discounted cash flow techniques and customized
option valuation models in order to reflect the particularities and circumstances of the instrument and
(ii) valuation assumptions based on market information.
For assets included in the fair value hierarchy 3, whose quotation is provided by a third-party using
parameters that are not observable in the market, the Bank proceeds, when applicable, to a detailed
analysis of the historical and liquidity performance of these assets, which may imply an additional
adjustment to its fair value, as well as a result of additional internal or external valuations.
The valuation models used by type of instrument are as follows:
Money market operations and loans and advances to customers: fair value is determined by the
discounted cash flows method, with future cash flow being discounted considering the currency yield
curve plus the credit risk of the entity contractually liquidating that flow.
Commercial paper: its fair value is determined by discounting future cash flows considering the currency
yield curve plus the credit risk of the issuer determined in the issuance program.
Debt instruments (bonds) with liquidity: the selective independent valuation methodology is used
based on observations available on Bloomberg, designated as ‘Best Price’, where all the valuations
available are requested, but only previously validated sources considered as input, with the model
excluding prices due to seniority and outlier prices. In the specific case of the Portuguese sovereign
debt, and due to the market making activity and the materiality of the Bank’s positions, the CBBT
source valuations are always considered (the CBBT is a composite of valuations prepared by Bloomberg,
which considers the average of executable prices with high liquidity).
Debt instruments (bonds) with reduced liquidity: the models considered for the valuation of low
liquidity bonds without observable market valuations are determined taking into account the
information available on the issuer and the instrument, with the following models being considered:
(i) discounted cash flows - cash flows are discounted considering the interest rate risk, credit risk of
the issuer and any other risks subjacent to the instrument; or (ii) valuations made available by external
counterparties, when it is impossible to determine the fair value of the instrument, with the selection
always falling on reliable sources with reputed credibility in the market and impartiality in the valuation
of the instruments being analyzed.
Convertible bonds: the cash flows are discounted considering the interest rate risk, the issuer’s credit
risk and any other risks that may be associated with the instrument, increased by the net present value
(NPV) of the convertibility options embedded in the instrument.
Shares and quoted funds: for quoted market products, the quotation on the respective stock exchange
is considered.
Unquoted Shares: the valuation is carried out using external valuations made of the companies in
which the shareholding is held. In the event the request for an external valuation is not justified due
to the immateriality of this position in the balance sheet, the position is revalued considering the book
value of the entity.
Unquoted funds: the valuation considered is that provided by the fund’s management company. In the
event there are calls for capital after the reference date of the last available valuation, the valuation
is recalculated considering the capital calls subsequent to the reference date at the amount at which
these were made, until a new valuation is made available by the management company, already
considering the capital calls realized. It should be noted that, although it accepts the valuations
provided by the management companies, when applicable in accordance with the funds’ regulations,
the Bank requests the legal certification of accounts issued by independent auditors in order to obtain
additional assurance about the information provided by the management company. Additionally, and
for the major assets held by the real estate investment funds, and according to an annual work plan
previously approved by the Executive Board of Directors, a process of challenge to their valuations
is carried out, consisting of a detailed technical analysis of the main assumptions considered in the
valuations. This process may lead to the need of new valuations as well as to adjustments to the fair
value of those assets.
In the specific case of the Restructuring Funds (“Assessed Assets”), their assessment was carried out
during the year 2020 by an independent external international entity (“Appraiser”), which engaged
renowned real estate appraisal companies to determine the fair value of real estate assets, which
represent a significant part of the funds’ portfolio.
The fair vale estimation Assessed Assets requires a multi-step approach, taking into account the
following (i) The fair value of the assets invested by each fund (the “Underlying Assets”); (ii) The nature
of the participation of the respective Fund in each of the Underlying Assets; (iii) The other assets and
liabilities on the Fund’s balance; (iv) The nature of novobanco investment in each of the funds; and (v)
Consideration of any applicable discounts or premiums. The fair value of the Underlying Assets was
estimated using three valuation approaches (market, income and cost) depending, among other things,
on the specific nature of each asset, its state of development, the information available and the date of
the initial investment. The other assets and liabilities in the fund’s balances would normally be valued
using the cost approach, with potential adjustments based on the market, and the consideration of
discounts and premiums, normally assessed using market data and benchmarks.
Underlying assets are mainly divided into Non-Real Estate assets and Real Estate assets (which can
be subdivided into Hotels and Other Real Estate assets). For Non-Real Estate Assets, the Appraiser
considered the Market approach based essentially on Market Multiples for comparable assets and
considering the historical performance of each asset. For Real Estate Assets, the appraiser considered
402
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes balances would normally be valued using the cost approach, with potential adjustments based on the market, and the consideration
of discounts and premiums, normally assessed using market data and benchmarks.
either the market approach or the income approach, depending on the state of each asset. In the case
of hotels, the main value-based assumptions considered were the average room rate, the occupancy
rate, the GOP margin, the EBITDA margin, the Capex needs and the discount rate. In relation to Other
Real Estate Assets, the main assumptions of value were sales prices, construction costs, timeline (both
to development and sale) and Discount Rates. Each of the assumptions described above considered
in the valuation of real estate assets was determined from asset to asset (total of 149 major assets
Underlying assets are mainly divided into Non-Real Estate assets and Real Estate assets (which can be subdivided into Hotels and
Other Real Estate assets). For Non-Real Estate Assets, the Appraiser considered the Market approach based essentially on Market
Multiples for comparable assets and considering the historical performance of each asset. For Real Estate Assets, the appraiser
considered either the market approach or the income approach, depending on the state of each asset. In the case of hotels, the main
balances would normally be valued using the cost approach, with potential adjustments based on the market, and the consideration
value-based assumptions considered were the average room rate, the occupancy rate, the GOP margin, the EBITDA margin, the
of discounts and premiums, normally assessed using market data and benchmarks.
Capex needs and the discount rate. In relation to Other Real Estate Assets, the main assumptions of value were sales prices,
construction costs, timeline (both to development and sale) and Discount Rates. Each of the assumptions described above considered
Underlying assets are mainly divided into Non-Real Estate assets and Real Estate assets (which can be subdivided into Hotels and
in the valuation of real estate assets was determined from asset to asset (total of 149 major assets subdivided into a total of more
Other Real Estate assets). For Non-Real Estate Assets, the Appraiser considered the Market approach based essentially on Market
than 1,000 assets), depending on the status of the asset, the asset's historical performance, location and market competitors.
Multiples for comparable assets and considering the historical performance of each asset. For Real Estate Assets, the appraiser
considered either the market approach or the income approach, depending on the state of each asset. In the case of hotels, the main
value-based assumptions considered were the average room rate, the occupancy rate, the GOP margin, the EBITDA margin, the
With regards to information on quantitative indicators underlying the fair value measurements of the Restructuring Funds, the following
Capex needs and the discount rate. In relation to Other Real Estate Assets, the main assumptions of value were sales prices,
is presented:
construction costs, timeline (both to development and sale) and Discount Rates. Each of the assumptions described above considered
in the valuation of real estate assets was determined from asset to asset (total of 149 major assets subdivided into a total of more
than 1,000 assets), depending on the status of the asset, the asset's historical performance, location and market competitors.
Assumption
Real Estate under
development
Agriculture properties
Commercial Centres
Real Estate
Hotels
subdivided into a total of more than 1,000 assets), depending on the status of the asset, the asset’s
historical performance, location and market competitors.
With regards to information on quantitative indicators underlying the fair value measurements of the
Restructuring Funds, the following is presented:
With regards to information on quantitative indicators underlying the fair value measurements of the Restructuring Funds, the following
is presented:
Bedroom average rate (€)
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
145
207
177
497
51
95
Min
Average Max
Min
Average Max
Min
Average Max
Min
Average Max
Min
Average Max
Occupancy rate %
Assumption
40%
Hotels
58%
78%
54%
Real Estate under
66%
development
75%
n.a.
Real Estate
n.a.
n.a.
Commercial Centres
n.a.
n.a.
n.a.
Agriculture properties
n.a.
n.a.
€/square meter
Min
n.a.
Average Max
n.a.
n.a.
Min
30
Average Max
3 227
6 059
Bedroom average rate (€)
51
177
497
95
€/Ha
n.a.
n.a.
n.a.
n.a.
Occupancy rate %
40%
58%
78%
54%
145
n.a.
66%
207
n.a.
75%
Min
173
n.a.
n.a.
n.a.
Average Max
2 024
4 610
Min
Average Max
Min
1 007
3 460
4 560
Average Max
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
3 954
23 088
77 296
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
Discount rate
€/square meter
7.5%
8.2% 10.6%
n.a.
n.a.
n.a.
€/Ha
Valuation methodology
Market approach
n.a.
Income approach
n.a.
n.a.
8.1% 12.1% 20.0%
6 059
3 227
30
5.0%
173
6.0%
2 024
7.0%
9.3%
4 610
1 007
9.7% 10.6%
4 560
3 460
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
Market approach
Income approach
n.a.
n.a.
Market approach
n.a.
Income approach
n.a.
n.a.
n.a.
Market approach
n.a.
Income approach
n.a.
3 954
Market approach
23 088
Income approach
77 296
Discount rate
7.5%
8.2% 10.6%
8.1% 12.1% 20.0%
5.0%
6.0%
7.0%
9.3%
9.7% 10.6%
n.a.
n.a.
n.a.
Notes:
1. All the above assumptions were calculated based on the average of the values considered by the exter nal evaluators per property assessed
2. The average presented was calculated on the property-weighted average in the sum of the value of the underlying assets per category
Market approach
Income approach
Market approach
Income approach
Market approach
Income approach
Market approach
Income approach
Market approach
Income approach
Valuation methodology
presented
n.a.
n.a.
n.a.
Notes:
Notes:
3. Hotel - Includes hotels and aparthotels currently in operation (Hotels under development or projects are included under Real Estate under
1. All the above assumptions were calculated based on the average of the values considered by the exter nal evaluators per property assessed
2. The average presented was calculated on the property-weighted average in the sum of the value of the underlying assets per category
Development together with their respective property)
are included under Real Estate under Development together with their respective property)
3. Hotel - Includes hotels and aparthotels currently in operation (Hotels under development or projects
1. All the above assumptions were calculated based on the average of the values considered by the
4. €/m2 consider the gross construction area
presented
external evaluators per property assessed
3. Hotel - Includes hotels and aparthotels currently in operation (Hotels under development or projects are included under Real Estate under
4. €/m2 consider the gross construction area
2. The average presented was calculated on the property-weighted average in the sum of the value
In addition, additional assumptions considered in the fair value measurement of the financial investments held in the restructuring
funds are presented below:
4. €/m2 consider the gross construction area
Development together with their respective property)
of the underlying assets per category presented
In addition, additional assumptions considered in the fair value measurement of the financial investments held in the restructuring
funds are presented below:
Type of Fund
Type of Fund
In addition, additional assumptions considered in the fair value measurement of the financial
investments held in the restructuring funds are presented below:
Discount based on P/BV
observable market data
Discount based on P/BV
observable market data
Real estate and Tourism
Real estate and Tourism/Other
Real estate and Tourism
Other
Real estate and Tourism/Other
14.5%
13.6%
14.5%
13.6%
10.6%
In 2021, and as had been done in 2020, the observable movement in terms of the evolution of market prices of funds, companies
and assets considered comparable to the underlying assets was considered in order to obtain an objective estimate of the evolution
In 2021, and as had been done in 2020, the observable movement in terms of the evolution of market prices of funds, companies
of the fair value of these assets between December 31, 2020 and December 31, 2021.
and assets considered comparable to the underlying assets was considered in order to obtain an objective estimate of the evolution
of the fair value of these assets between December 31, 2020 and December 31, 2021.
Other
10.6%
Derivative instruments: if these are traded on organized markets, the valuations are observable in the market, otherwise these are
Derivative instruments: if these are traded on organized markets, the valuations are observable in the market, otherwise these are
valued using standard models and relying on observable variables in the market, namely:
valued using standard models and relying on observable variables in the market, namely:
Foreign currency options: are valued through the front office system, which considers models such as Garman-Kohlhagen,
Foreign currency options: are valued through the front office system, which considers models such as Garman-Kohlhagen,
Binomial, Black & Scholes, Levy or Vanna-Volga;
Binomial, Black & Scholes, Levy or Vanna-Volga;
Interest rate swaps and foreign currency swaps: the valuation of these instruments is done through the front office system,
Interest rate swaps and foreign currency swaps: the valuation of these instruments is done through the front office system,
where the fixed leg cash flows of the instrument are discounted based on the yield curve of the respective currency, and the
where the fixed leg cash flows of the instrument are discounted based on the yield curve of the respective currency, and the
cash flows of the variable leg are projected considering the forward curve and discounted, also considering discount factors
cash flows of the variable leg are projected considering the forward curve and discounted, also considering discount factors
and forward rates based on the yield curve of the respective currency;
and forward rates based on the yield curve of the respective currency;
Credit Default Swaps (CDS): both legs of the CDS are composed of cash flows contingent on the credit risk of the underlying
Credit Default Swaps (CDS): both legs of the CDS are composed of cash flows contingent on the credit risk of the underlying
asset and are therefore valued using market credit spreads;
asset and are therefore valued using market credit spreads;
Futures and Options: the Bank trades these products on an organized market, but also has the possibility to trade them on
Futures and Options: the Bank trades these products on an organized market, but also has the possibility to trade them on
the OTC market. For futures and options traded on an organized market, the valuations are observable in the market, with
the OTC market. For futures and options traded on an organized market, the valuations are observable in the market, with
83
83
403
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
In 2021, and as had been done in 2020, the observable movement in terms of the evolution of market
prices of funds, companies and assets considered comparable to the underlying assets was considered
in order to obtain an objective estimate of the evolution of the fair value of these assets between
December 31, 2020 and December 31, 2021.
Derivative instruments: if these are traded on organized markets, the valuations are observable in the
market, otherwise these are valued using standard models and relying on observable variables in the
market, namely:
• Foreign currency options: are valued through the front office system, which considers models such
as Garman-Kohlhagen, Binomial, Black & Scholes, Levy or Vanna-Volga;
•
Interest rate swaps and foreign currency swaps: the valuation of these instruments is done through
the front office system, where the fixed leg cash flows of the instrument are discounted based
on the yield curve of the respective currency, and the cash flows of the variable leg are projected
considering the forward curve and discounted, also considering discount factors and forward rates
based on the yield curve of the respective currency;
• Credit Default Swaps (CDS): both legs of the CDS are composed of cash flows contingent on the
credit risk of the underlying asset and are therefore valued using market credit spreads;
• Futures and Options: the Bank trades these products on an organized market, but also has the
possibility to trade them on the OTC market. For futures and options traded on an organized market,
the valuations are observable in the market, with the valuation being received daily through the
broker selected for these products. For futures and options traded on the OTC market, and depending
on the type of product and the underlying asset type, discrete time (binominal) or continuous time
(Black & Scholes) models may be used.
The Bank calculates the Credit Valuation Adjustment (CVA) for derivative instruments in accordance
with the following methodology: (i) Portfolio basis – the calculation of the CVA corresponds to the
application, to the aggregate exposure of each counterpart, of an expected loss and a recovery
rate, considering the average duration period estimated for each exposure; (ii) Individual basis – the
calculation of the CVA on an individual basis is based on the determination of the exposure using
stochastic methods (Expected Positive Exposure) which translates into the calculation of the expected
fair value exposure that each derivative is likely to assume over its remaining life. Subsequently, are
applied to the exposure determined, an expected loss and a recovery rate.
The Bank chooses not to register “Debt Valuation Adjustment” (DVA), which represents the market
value of own credit risk of the group of a certain negative exposure to a counterparty, reflecting a
prudent perspective of application of this regulation. It should be noted that the exposure potentially
subject to DVA is controlled on a monthly basis and has assumed immaterial values.
The validation of the valuation of financial instruments is performed by an independent area, which
validates the models used and the prices assigned. More specifically, this area is responsible for carrying
out independent verification of the prices for mark-to-market valuations, and for mark-to-model
valuations, it validates the models used and any changes thereto, whenever they exist. For prices
provided by external entities, the validation performed consists in confirming the use of correct prices.
The fair value of the financial assets and liabilities and non-financial assets of the Bank measured at fair
value is as follows:
404
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes the valuation being received daily through the broker selected for these products. For futures and options traded on the OTC
market, and depending on the type of product and the underlying asset type, discrete time (binominal) or continuous time
(Black & Scholes) models may be used.
The Bank calculates the Credit Valuation Adjustment (CVA) for derivative instruments in accordance with the following methodology:
(i) Portfolio basis – the calculation of the CVA corresponds to the application, to the aggregate exposure of each counterpart, of an
expected loss and a recovery rate, considering the average duration period estimated for each exposure; (ii) Individual basis – the
calculation of the CVA on an individual basis is based on the determination of the exposure using stochastic methods (Expected
Positive Exposure) which translates into the calculation of the expected fair value exposure that each derivative is likely to assume
over its remaining life. Subsequently, are applied to the exposure determined, an expected loss and a recovery rate.
The Bank chooses not to register "Debt Valuation Adjustment" (DVA), which represents the market value of own credit risk of the
group of a certain negative exposure to a counterparty, reflecting a prudent perspective of application of this regulation. It should be
noted that the exposure potentially subject to DVA is controlled on a monthly basis and has assumed immaterial values.
The validation of the valuation of financial instruments is performed by an independent area, which validates the models used and
the prices assigned. More specifically, this area is responsible for carrying out independent verification of the prices for mark-to-
market valuations, and for mark-to-model valuations, it validates the models used and any changes thereto, whenever they exist. For
prices provided by external entities, the validation performed consists in confirming the use of correct prices.
The fair value of the financial assets and liabilities and non-financial assets of the Bank measured at fair value is as follows:
31 December 2021
Financial assets held for trading
Securities held for trading
Bonds issued by public entities
Derivatives held for trading
Exchange rate contracts
Interest rate contracts
Other
Financial assets mandatorily at fair value through profit or loss
Bonds issued by other entities
Shares
Other variable income securities
Financial assets at fair value through other comprehensive income
Bonds issued by public entities
Bonds issued by other entities
Shares
Derivatives - Hedge Accounting
Interest rate contracts
Assets at fair value
Financial liabilities held for trading
Derivatives held for trading
Exchange rate contracts
Interest rate contracts
Credit default contracts
Other
Derivatives - Hedge Accounting
Loans
Liabilities at fair value
(in thousands of Euros)
At Fair Value
Quoted market
prices
Valuation models based
on observable market
parameters
(Stage 1)
(Stage 2)
Valuation models
based on
unobservable
market
parameters
(Stage 3)
Total Fair Value
114 465
114 465
114 465
-
-
-
-
187 621
52 532
135 089
-
7 091 159
5 685 067
1 398 899
7 193
-
-
7 393 245
-
-
-
-
-
-
-
-
-
263 244
-
-
263 244
29 172
225 196
8 876
26 309
50
-
26 259
6 624
-
-
6 624
20 150
20 150
-
-
-
-
-
-
-
2 036 378
506 645
290 274
1 239 459
35 725
-
-
35 725
-
-
377 709
114 465
114 465
263 244
29 172
225 196
8 876
2 250 308
559 227
425 363
1 265 718
7 133 508
5 685 067
1 398 899
49 542
20 150
20 150
316 327
2 072 103
9 781 675
303 562
303 562
34 690
265 939
574
2 359
44 460
44 460
1 950
1 950
-
1 950
-
-
-
-
305 512
305 512
34 690
267 889
574
2 359
44 460
44 460
348 022
1 950
349 972
84
405
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
31 December 2020
Financial assets held for trading
Securities held for trading
Bonds issued by public entities
Derivatives held for trading
Exchange rate contracts
Interest rate contracts
Other
Financial assets mandatorily at fair value through profit or loss
Bonds issued by other entities
Shares
Other variable income securities
Financial assets at fair value through other comprehensive income
Bonds issued by public entities
Bonds issued by other entities
Shares
Derivatives - Hedge Accounting
Interest rate contracts
Assets at fair value
Financial liabilities held for trading
Derivatives held for trading
Exchange rate contracts
Interest rate contracts
Credit default contracts
Other
Derivatives - Hedge Accounting
Interest rate contracts
Liabilities at fair value
(in thousands of Euros)
At Fair Value
Quoted market
prices
Valuation models based
on observable market
parameters
(Stage 1)
(Stage 2)
Valuation models
based on
unobservable
market
parameters
(Stage 3)
Total Fair Value
267 016
267 016
267 016
-
-
-
-
212 392
82 203
130 189
-
7 770 720
6 406 465
1 352 759
11 496
-
-
8 250 128
-
-
-
-
-
-
-
-
-
388 311
-
-
388 311
57 273
319 662
11 376
44 694
50
-
44 644
7 131
-
-
7 131
13 606
13 606
-
-
-
-
-
-
-
655 327
267 016
267 016
388 311
57 273
319 662
11 376
2 188 519
2 445 605
564 829
273 563
1 350 127
35 733
-
-
35 733
-
-
647 082
403 752
1 394 771
7 813 584
6 406 465
1 352 759
54 360
13 606
13 606
453 742
2 224 252
10 928 122
552 185
552 185
45 450
501 419
16
5 300
72 543
72 543
624 728
2 158
2 158
-
2 158
-
-
-
-
2 158
554 343
554 343
45 450
503 577
16
5 300
72 543
72 543
626 886
The changes occurred in financial assets and financial liabilities valued based on non-observable market information (level 3 of the
fair value hierarchy) during the financial years of 2021 and 2020, can be analyzed as follows:
Financial assets held for
trading
Derivatives
held for
trading
Economic
hedging
derivatives
Financial assets
mandatorily at fair
value through
profit or loss
31.12.2021
Financial assets at
fair value through
other
comprehensive
income
Total assets
Financial liabilities
held for trading
Derivatives held for
trading
Total
liabilities
(in thousands of Euros)
Balance as at 31 December 2020
Acquisitions
Attainment of maturity
Settlements
Transfers in
Changes in value
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2 188 519
81 650
( 138 500)
( 122 392)
2 751
24 350
2 036 378
35 733
2 224 252
2 158
2 158
556
-
( 4 246)
2 300
1 382
82 206
( 138 500)
( 126 638)
5 051
25 732
24 117
-
( 24 117)
-
( 208)
24 117
-
( 24 117)
-
( 208)
406
Balance as at 31 December 2021
35 725
2 072 103
1 950
1 950
85
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
31 December 2020
Financial assets held for trading
Securities held for trading
Bonds issued by public entities
Derivatives held for trading
Exchange rate contracts
Interest rate contracts
Other
Bonds issued by other entities
Shares
Other variable income securities
Bonds issued by public entities
Bonds issued by other entities
Shares
Derivatives - Hedge Accounting
Interest rate contracts
Assets at fair value
Financial liabilities held for trading
Derivatives held for trading
Exchange rate contracts
Interest rate contracts
Credit default contracts
Other
Derivatives - Hedge Accounting
Interest rate contracts
Liabilities at fair value
At Fair Value
Valuation models
(in thousands of Euros)
Quoted market
prices
parameters
Valuation models based
based on
on observable market
unobservable
Total Fair Value
(Stage 1)
(Stage 2)
market
parameters
(Stage 3)
267 016
267 016
267 016
212 392
82 203
130 189
7 770 720
6 406 465
1 352 759
11 496
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
388 311
-
-
388 311
57 273
319 662
11 376
44 694
50
44 644
7 131
-
-
-
7 131
13 606
13 606
552 185
552 185
45 450
501 419
16
5 300
72 543
72 543
624 728
-
-
-
-
-
-
-
-
-
-
-
564 829
273 563
1 350 127
35 733
35 733
2 158
2 158
-
2 158
-
-
-
-
2 158
655 327
267 016
267 016
388 311
57 273
319 662
11 376
647 082
403 752
1 394 771
7 813 584
6 406 465
1 352 759
54 360
13 606
13 606
554 343
554 343
45 450
503 577
16
5 300
72 543
72 543
626 886
8 250 128
453 742
2 224 252
10 928 122
Financial assets mandatorily at fair value through profit or loss
2 188 519
2 445 605
Financial assets at fair value through other comprehensive income
The changes occurred in financial assets and financial liabilities valued based on non-observable market
information (level 3 of the fair value hierarchy) during the financial years of 2021 and 2020, can be
analyzed as follows:
The changes occurred in financial assets and financial liabilities valued based on non-observable market information (level 3 of the
fair value hierarchy) during the financial years of 2021 and 2020, can be analyzed as follows:
Financial assets held for
trading
Derivatives
held for
trading
Economic
hedging
derivatives
Financial assets
mandatorily at fair
value through
profit or loss
31.12.2021
Financial assets at
fair value through
other
comprehensive
income
Total assets
Financial liabilities
held for trading
Derivatives held for
trading
Total
liabilities
(in thousands of Euros)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2 188 519
81 650
( 138 500)
( 122 392)
2 751
24 350
2 036 378
35 733
2 224 252
2 158
2 158
556
-
( 4 246)
2 300
1 382
82 206
( 138 500)
( 126 638)
5 051
25 732
24 117
-
( 24 117)
-
( 208)
24 117
-
( 24 117)
-
( 208)
35 725
2 072 103
1 950
1 950
Balance as at 31 December 2020
Acquisitions
Attainment of maturity
Settlements
Transfers in
Changes in value
Balance as at 31 December 2021
Financial assets held for
trading
Derivatives
held for
trading
Economic
hedging
derivatives
Financial assets
mandatorily at fair
value through
profit or loss
191
-
-
-
-
-
( 191)
-
74 093
-
-
( 80 489)
-
-
6 396
-
2 875 070
31 393
( 162 380)
( 1 583)
-
( 35 386)
( 518 595)
2 188 519
(in thousands of Euros)
31.12.2020
Financial assets at
fair value through
other
comprehensive
income
Total assets
Financial liabilities
held for trading
Derivatives held for
trading
Total
liabilities
34 600
2 983 954
1 837
1 837
5 048
-
( 21 317)
9 738
( 1 250)
8 914
36 441
( 162 380)
( 103 389)
9 738
( 36 636)
( 503 476)
35 733
2 224 252
-
-
-
-
-
321
2 158
-
-
-
-
-
321
2 158
85
Balance as at 31 December 2019
Acquisitions
Attainment of maturity
Settlements
Transfers in
Transfers out
Changes in value
Balance as at 31 December 2020
In the years 2021 and 2020 there were no significant transfers of value between the different levels of
the fair value hierarchy.
Potential gains and losses on financial instruments and investment property classified at level 3 of the
fair value hierarchy are recorded in profit or loss or revaluation reserves in accordance with the respective
asset accounting policy. The amounts calculated on 31 December 2021 and 2020 were as follows:
407
86
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
In the years 2021 and 2020 there were no significant transfers of value between the different levels of the fair value hierarchy.
Potential gains and losses on financial instruments and investment property classified at level 3 of the fair value hierarchy are recorded
In the years 2021 and 2020 there were no significant transfers of value between the different levels of the fair value hierarchy.
in profit or loss or revaluation reserves in accordance with the respective asset accounting policy. The amounts calculated on 31
December 2021 and 2020 were as follows:
Potential gains and losses on financial instruments and investment property classified at level 3 of the fair value hierarchy are recorded
(in thousands of Euros)
in profit or loss or revaluation reserves in accordance with the respective asset accounting policy. The amounts calculated on 31
31.12.2021
December 2021 and 2020 were as follows:
31.12.2020
Recognised in
reserves
Recognised in
-
reserves
Recognised in
the income
31.12.2021
statement
Recognised in
144
the income
statement
Total
Recognised in
reserves
144
Total
Recognised in
-
reserves
Recognised in
the income
31.12.2020
statement
Recognised in
23 605
the income
statement
( 68 722)
(in thousands of Euros)
Total
23 605
Total
Derivatives held for trading
-
Risk Management Derivatives
Financial assets mandatorily at fair value through profit or
Derivatives held for trading
loss
Risk Management Derivatives
Financial assets at fair value through other
Financial assets mandatorily at fair value through profit or
comprehensive income
loss
Financial assets at fair value through other
comprehensive income
The following table presents, for financial assets included in level 3 of the fair value hierarchy, the main valuation methods used and
the impact of changing the main variables used in their valuation, when applicable:
( 68 722)
-
( 514 186)
( 559 303)
-
( 68 722)
9 632
( 514 186)
( 549 671)
9 632
( 24 117)
-
29 501
5 528
-
( 24 117)
9 122
29 501
14 650
9 122
-
9 632
-
9 632
9 632
-
9 122
-
9 122
9 122
( 514 186)
23 605
( 514 186)
23 605
( 559 303)
( 549 671)
( 68 722)
( 24 117)
( 24 117)
29 501
144
29 501
144
14 650
9 122
9 632
5 528
-
-
-
-
-
The following table presents, for financial assets included in level 3 of the fair value hierarchy, the main
valuation methods used and the impact of changing the main variables used in their valuation, when
applicable:
The following table presents, for financial assets included in level 3 of the fair value hierarchy, the main valuation methods used and
the impact of changing the main variables used in their valuation, when applicable:
Unfavorable scenario
Favorable scenario
Assets classified under level 3
(in millions of Euros)
31.12.2021
Valuation Model
Variable analysed
Carrying book
value
31.12.2021
2 036.4
Carrying book
value
Financial assets mandatorily at fair value through
profit or loss
Assets classified under level 3
Obligations of other issuers
Financial assets mandatorily at fair value through
profit or loss
Shares
Obligations of other issuers
Shares
Other variable income securities
Other variable income securities
Financial assets at fair value through other
comprehensive income
Shares
Financial assets at fair value through other
comprehensive income
Total
Valuation Model
Variable analysed
Discounted cash flow model
Discounted cash flow model
Specific Impairment
Discount rate
Valuation of the management
Discounted cash flow model
company (adjusted)
Discounted cash flow model
Others
Valuation of the management
Valuation of the management
company (adjusted)
company (adjusted)
Others
Valuation of the management
company
Valuation of the management
company (adjusted)
Valuation of the management
company
Discounted cash flows
Other
Specific Impairment
(b)
Discount rate
(a)
(b)
(b)
(a)
(c)
(b)
(c)
Renewable Energy Tariff
(a)
Change
Impact
Change
(in millions of Euros)
Impact
Unfavorable scenario
( 37.6)
Favorable scenario
58.7
Change
-50%
-50%
506.6
2.4
2 036.4
504.3 (-) 100 bps
290.3
506.6
2.4
287.5
504.3 (-) 100 bps
2.8
290.3
1 239.5
287.5
236.5
2.8
1 239.5
1 002.9
236.5
35.7
1 002.9
35.7
9.6
35.7
26.1
Impact
Change
Impact
+50%
(+) 100 bps
+50%
(+) 100 bps
( 2.4)
( 37.6)
( 35.2)
-
( 2.4)
-
( 35.2)
-
-
-
-
-
-
-
-
-
( 1.7)
-
-
( 1.7)
( 1.7)
-
4.8
58.7
54.0
-
4.8
-
54.0
-
-
-
-
-
-
-
-
-
0.1
-
-
0.1
0.1
-
Shares
(a) No sensitivity analysis was carried out for these categories as these include securities of an individually immaterial value.
58.8
-
0.1
-
(b) For the sensitivity analysis carried out on the valuation of the Restructuring Funds, taking into account the valuation methodologies applied and considering that real estate assets represent more than 95% of the underlying assets of the Funds, a variation of +
10% was considered and -10% in the fair value of the main real estate assets of each Fund, which leads to an impact of + 5.8% and -5.7% in the fair value of the restructuring funds.
58.8
Total
(c) In the specific case of participation units valued in accordance with quotations provided by the respective management company, it is not reasonable to carry out an analysis of the impact of changes of the variables subjacent to the determination of the
(a) No sensitivity analysis was carried out for these categories as these include securities of an individually immaterial value.
quotation by the entity
Renewable Energy Tariff
(a)
Discounted cash flows
Other
2 072.1
35.7
9.6
26.1
( 39.3)
-
( 1.7)
-
2 072.1
( 39.3)
(b) For the sensitivity analysis carried out on the valuation of the Restructuring Funds, taking into account the valuation methodologies applied and considering that real estate assets represent more than 95% of the underlying assets of the Funds, a variation of +
10% was considered and -10% in the fair value of the main real estate assets of each Fund, which leads to an impact of + 5.8% and -5.7% in the fair value of the restructuring funds.
(in millions of Euros)
(c) In the specific case of participation units valued in accordance with quotations provided by the respective management company, it is not reasonable to carry out an analysis of the impact of changes of the variables subjacent to the determination of the
quotation by the entity
31.12.2020
-50%
Impact
Change
Change
(in millions of Euros)
Change
Impact
2 188.5
Carrying book
value
Unfavorable scenario
Favorable scenario
Unfavorable scenario
( 56.4)
Favorable scenario
68.9
Carrying book
value
31.12.2020
564.8
77.9
2 188.5
486.9 (-) 100 bps
Assets classified under level 3
Valuation Model
Variable analysed
Financial assets mandatorily at fair value through
profit or loss
Assets classified under level 3
Obligations of other issuers
Financial assets mandatorily at fair value through
profit or loss
Obligations of other issuers
Shares
Other variable income securities
Shares
Other variable income securities
Financial assets at fair value through other
comprehensive income
Shares
comprehensive income
Total
Shares
Financial assets at fair value through other
Valuation Model
Variable analysed
Discounted cash flow model
Discounted cash flow model
Valuation of the management
company (adjusted)
Discounted cash flow model
Discounted cash flow model
Valuation of the management
Valuation of the management
company (adjusted)
company (adjusted)
Valuation of the management
company
Valuation of the management
company (adjusted)
Valuation of the management
company
Other
Other
Specific Impairment
Discount rate
(b)
(b)
(b)
(c)
(b)
(c)
(a)
(a)
Discounted cash flows
Renewable Energy Tariff
Specific Impairment
Discount rate
-50%
486.9 (-) 100 bps
( 22.2)
-
( 34.3)
+50%
(+) 100 bps
(a) No sensitivity analysis was carried out for these categories as these include securities of an individually immaterial value.
Discounted cash flows
Renewable Energy Tariff
(b) For the sensitivity analysis carried out on the valuation of the Restructuring Funds, taking into account the valuation methodologies applied and considering that real estate assets represent more than 95% of the underlying assets of the Funds, a variation of +
10% was considered and -10% in the fair value of the main real estate assets of each Fund, which leads to an impact of + 6.15% and -5.8% in the fair value of the restructuring funds.
Total
(c) In the specific case of participation units valued in accordance with quotations provided by the respective management company, it is not reasonable to carry out an analysis of the impact of changes of the variables subjacent to the determination of the
(a) No sensitivity analysis was carried out for these categories as these include securities of an individually immaterial value.
quotation by the entity
(b) For the sensitivity analysis carried out on the valuation of the Restructuring Funds, taking into account the valuation methodologies applied and considering that real estate assets represent more than 95% of the underlying assets of the Funds, a variation of +
10% was considered and -10% in the fair value of the main real estate assets of each Fund, which leads to an impact of + 6.15% and -5.8% in the fair value of the restructuring funds.
(c) In the specific case of participation units valued in accordance with quotations provided by the respective management company, it is not reasonable to carry out an analysis of the impact of changes of the variables subjacent to the determination of the
quotation by the entity
408
Impact
Change
Impact
( 22.2)
( 56.4)
( 34.3)
+50%
(+) 100 bps
-
-
-
-
-
-
( 1.7)
( 1.7)
( 1.7)
-
( 58.2)
-
( 1.7)
-
( 58.2)
12.2
68.9
56.7
12.2
-
56.7
-
-
-
-
-
0.1
-
0.1
-
0.1
69.0
-
0.1
-
69.0
87
87
273.6
564.8
77.9
1 350.1
225.3
273.6
1 350.1
1 124.9
225.3
35.7
1 124.9
35.7
9.6
26.1
35.7
2 224.3
35.7
9.6
26.1
2 224.3
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
In the years 2021 and 2020 there were no significant transfers of value between the different levels of the fair value hierarchy.
Potential gains and losses on financial instruments and investment property classified at level 3 of the fair value hierarchy are recorded
in profit or loss or revaluation reserves in accordance with the respective asset accounting policy. The amounts calculated on 31
December 2021 and 2020 were as follows:
Recognised in
reserves
Total
Recognised in
reserves
31.12.2021
Recognised in
the income
statement
(in thousands of Euros)
31.12.2020
Recognised in
the income
statement
Total
23 605
( 68 722)
23 605
( 68 722)
Derivatives held for trading
Risk Management Derivatives
Financial assets mandatorily at fair value through profit or
loss
Financial assets at fair value through other
comprehensive income
144
( 24 117)
144
( 24 117)
-
-
-
-
-
-
29 501
29 501
( 514 186)
( 514 186)
9 122
-
9 122
9 632
-
9 632
9 122
5 528
14 650
9 632
( 559 303)
( 549 671)
The following table presents, for financial assets included in level 3 of the fair value hierarchy, the main valuation methods used and
the impact of changing the main variables used in their valuation, when applicable:
Assets classified under level 3
Valuation Model
Variable analysed
Carrying book
Unfavorable scenario
Favorable scenario
value
Change
Impact
Change
Impact
31.12.2021
(in millions of Euros)
Discounted cash flow model
Specific Impairment
-50%
Discounted cash flow model
Discount rate
504.3 (-) 100 bps
( 2.4)
( 35.2)
+50%
(+) 100 bps
Financial assets mandatorily at fair value through
profit or loss
Obligations of other issuers
Shares
Other variable income securities
Financial assets at fair value through other
comprehensive income
Shares
Total
(a) No sensitivity analysis was carried out for these categories as these include securities of an individually immaterial value.
Other
2 036.4
506.6
2.4
290.3
287.5
2.8
1 239.5
236.5
1 002.9
35.7
35.7
9.6
26.1
2 072.1
( 37.6)
-
-
-
-
-
-
-
-
( 1.7)
( 1.7)
( 39.3)
(b)
(a)
(b)
(c)
(a)
58.7
4.8
54.0
-
-
-
-
-
-
0.1
0.1
-
-
58.8
Valuation of the management
company (adjusted)
Others
Valuation of the management
company (adjusted)
Valuation of the management
company
Discounted cash flows
Renewable Energy Tariff
(b) For the sensitivity analysis carried out on the valuation of the Restructuring Funds, taking into account the valuation methodologies applied and considering that real estate assets represent more than 95% of the underlying assets of the Funds, a variation of +
10% was considered and -10% in the fair value of the main real estate assets of each Fund, which leads to an impact of + 5.8% and -5.7% in the fair value of the restructuring funds.
(c) In the specific case of participation units valued in accordance with quotations provided by the respective management company, it is not reasonable to carry out an analysis of the impact of changes of the variables subjacent to the determination of the
quotation by the entity
Assets classified under level 3
Valuation Model
Variable analysed
Financial assets mandatorily at fair value through
profit or loss
Obligations of other issuers
Shares
Other variable income securities
Discounted cash flow model
Discounted cash flow model
Valuation of the management
company (adjusted)
Valuation of the management
company (adjusted)
Valuation of the management
company
Specific Impairment
Discount rate
(b)
(b)
(c)
Financial assets at fair value through other
comprehensive income
Shares
Total
(a) No sensitivity analysis was carried out for these categories as these include securities of an individually immaterial value.
Discounted cash flows
Other
Renewable Energy Tariff
(a)
31.12.2020
Carrying book
value
Unfavorable scenario
Favorable scenario
Change
Impact
Change
Impact
(in millions of Euros)
2 188.5
564.8
77.9
-50%
486.9 (-) 100 bps
( 56.4)
( 22.2)
( 34.3)
+50%
(+) 100 bps
273.6
1 350.1
225.3
1 124.9
35.7
35.7
9.6
26.1
2 224.3
-
-
-
( 1.7)
-
( 1.7)
-
( 58.2)
68.9
12.2
56.7
-
-
-
0.1
-
0.1
-
69.0
(b) For the sensitivity analysis carried out on the valuation of the Restructuring Funds, taking into account the valuation methodologies applied and considering that real estate assets represent more than 95% of the underlying assets of the Funds, a variation of +
10% was considered and -10% in the fair value of the main real estate assets of each Fund, which leads to an impact of + 6.15% and -5.8% in the fair value of the restructuring funds.
(c) In the specific case of participation units valued in accordance with quotations provided by the respective management company, it is not reasonable to carry out an analysis of the impact of changes of the variables subjacent to the determination of the
quotation by the entity
The main parameters used, at 31 December 2021 and 2020, in the valuation models were as follows:
87
Interest rate curves
Interest rate curves
The short-term rates presented reflect benchmark interest rates for the money market, whilst those
The short-term rates presented reflect benchmark interest rates for the money market, whilst those presented for the long-term
represent the interest rate swap quotations for the respective periods:
presented for the long-term represent the interest rate swap quotations for the respective periods:
The main parameters used, at 31 December 2021 and 2020, in the valuation models were as follows:
31.12.2021
31.12.2020
EUR
USD
GBP
EUR
USD
GBP
(%)
-0.5740
-0.5830
-0.5720
-0.5460
-0.5235
-0.5010
-0.1450
0.0160
0.1300
0.3030
0.4920
0.5480
0.5240
0.4790
0.0644
0.1013
0.2091
0.3388
0.4603
0.5831
1.1495
1.3460
1.4530
1.5610
1.6800
1.7708
1.7316
1.7160
0.2100
0.2400
0.3900
0.6100
0.6700
0.8246
1.2972
1.2910
1.2373
1.2095
1.1817
1.1518
1.1264
1.1030
-0.5780
-0.5540
-0.5450
-0.5260
-0.5125
-0.4990
-0.5080
-0.4575
-0.3845
-0.2650
-0.0720
0.0090
0.0090
-0.0250
0.0776
0.1439
0.2384
0.2576
0.2995
0.3419
0.2370
0.4275
0.6478
0.9170
1.1835
1.3033
1.3680
1.3998
0.1000
0.0900
0.0900
0.1450
0.1950
-0.0125
0.0913
0.1926
0.2799
0.3966
0.5200
0.5730
0.5805
0.5741
Overnight
1 month
3 months
6 months
9 months
1 year
3 years
5 years
7 years
10 years
15 years
20 years
25 years
30 years
Credit Spreads
The credit spreads used by the Bank in the valuation of credit derivatives are those disclosed on a daily basis by Markit, representing
observations pertaining to around 85 renowned international financial entities. The evolution of the main indexes, understood as being
representative of the credit spread behaviour in the market during the year, is presented as follows:
409
Index
Series
1 year
3 years
5 years
7 years
10 years
(basis points)
31 December 2021
CDX USD Main
iTraxx Eur Main
iTraxx Eur Senior Financial
31 December 2020
CDX USD Main
iTraxx Eur Main
iTraxx Eur Senior Financial
37
36
36
35
34
34
0.00
10.43
0.00
18.95
0.00
0.00
0.00
26.82
0.00
30.35
27.66
0.00
49.57
47.76
54.86
49.98
47.95
59.06
68.55
66.71
0.00
70.70
66.24
0.00
0.00
87.01
85.86
90.52
86.37
89.30
Interest rate volatility
The values presented below represent the implicit volatilities (at the money) used for the valuation of interest rate options:
31.12.2021
USD
73.74
59.15
56.88
54.59
50.93
-
GBP
76.14
63.57
71.17
79.98
88.08
-
EUR
23.16
55.79
65.81
68.34
68.98
66.28
(%)
31.12.2020
USD
GBP
118.44
91.12
84.06
65.41
62.77
-
-
-
-
-
-
-
EUR
15.39
21.33
28.38
34.60
41.18
46.54
1 year
3 years
5 years
7 years
10 years
15 years
88
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The main parameters used, at 31 December 2021 and 2020, in the valuation models were as follows:
The main parameters used, at 31 December 2021 and 2020, in the valuation models were as follows:
Interest rate curves
Interest rate curves
The short-term rates presented reflect benchmark interest rates for the money market, whilst those presented for the long-term
represent the interest rate swap quotations for the respective periods:
The short-term rates presented reflect benchmark interest rates for the money market, whilst those presented for the long-term
represent the interest rate swap quotations for the respective periods:
31.12.2021
31.12.2020
EUR
31.12.2021
USD
GBP
EUR
31.12.2020
USD
GBP
USD
0.0644
GBP
0.2100
USD
0.0776
GBP
0.1000
Overnight
Overnight
1 month
3 months
1 month
6 months
3 months
9 months
6 months
9 months
1 year
3 years
1 year
3 years
5 years
5 years
7 years
7 years
10 years
10 years
15 years
15 years
20 years
20 years
25 years
25 years
30 years
30 years
EUR
-0.5740
-0.5830
-0.5740
-0.5720
-0.5830
-0.5460
-0.5720
-0.5235
-0.5460
-0.5235
-0.5010
-0.5010
-0.1450
-0.1450
0.0160
0.0160
0.1300
0.1300
0.3030
0.3030
0.4920
0.4920
0.5480
0.5480
0.5240
0.5240
0.4790
0.4790
0.1013
0.0644
0.2091
0.1013
0.2091
0.3388
0.3388
0.4603
0.4603
0.5831
0.5831
1.1495
1.1495
1.3460
1.3460
1.4530
1.4530
1.5610
1.5610
1.6800
1.6800
1.7708
1.7708
1.7316
1.7316
1.7160
1.7160
0.2400
0.2100
0.3900
0.2400
0.3900
0.6100
0.6100
0.6700
0.6700
0.8246
0.8246
1.2972
1.2972
1.2910
1.2910
1.2373
1.2373
1.2095
1.2095
1.1817
1.1817
1.1518
1.1518
1.1264
1.1264
1.1030
1.1030
EUR
-0.5780
-0.5540
-0.5780
-0.5450
-0.5540
-0.5450
-0.5260
-0.5260
-0.5125
-0.5125
-0.4990
-0.4990
-0.5080
-0.5080
-0.4575
-0.4575
-0.3845
-0.3845
-0.2650
-0.2650
-0.0720
-0.0720
0.0090
0.0090
0.0090
0.0090
-0.0250
-0.0250
0.1439
0.0776
0.1439
0.2384
0.2384
0.2576
0.2576
0.2995
0.2995
0.3419
0.3419
0.2370
0.2370
0.4275
0.4275
0.6478
0.6478
0.9170
0.9170
1.1835
1.1835
1.3033
1.3033
1.3680
1.3680
1.3998
1.3998
(%)
(%)
0.0900
0.1000
0.0900
0.0900
0.0900
0.1450
0.1450
0.1950
-0.0125
0.1950
-0.0125
0.0913
0.0913
0.1926
0.1926
0.2799
0.2799
0.3966
0.3966
0.5200
0.5200
0.5730
0.5730
0.5805
0.5805
0.5741
0.5741
Credit Spreads
The credit spreads used by the Bank in the valuation of credit derivatives are those disclosed on a daily
basis by Markit, representing observations pertaining to around 85 renowned international financial
entities. The evolution of the main indexes, understood as being representative of the credit spread
behaviour in the market during the year, is presented as follows:
Credit Spreads
The credit spreads used by the Bank in the valuation of credit derivatives are those disclosed on a daily basis by Markit, representing
Credit Spreads
observations pertaining to around 85 renowned international financial entities. The evolution of the main indexes, understood as being
The credit spreads used by the Bank in the valuation of credit derivatives are those disclosed on a daily basis by Markit, representing
representative of the credit spread behaviour in the market during the year, is presented as follows:
observations pertaining to around 85 renowned international financial entities. The evolution of the main indexes, understood as being
representative of the credit spread behaviour in the market during the year, is presented as follows:
(basis points)
Index
Index
31 December 2021
CDX USD Main
31 December 2021
CDX USD Main
iTraxx Eur Main
iTraxx Eur Main
iTraxx Eur Senior Financial
iTraxx Eur Senior Financial
31 December 2020
CDX USD Main
31 December 2020
CDX USD Main
iTraxx Eur Main
iTraxx Eur Main
iTraxx Eur Senior Financial
iTraxx Eur Senior Financial
Series
Series
1 year
1 year
3 years
3 years
5 years
5 years
7 years
7 years
(basis points)
10 years
10 years
37
37
36
36
36
36
35
35
34
34
34
34
0.00
0.00
10.43
10.43
0.00
0.00
18.95
18.95
0.00
0.00
0.00
0.00
0.00
0.00
26.82
26.82
0.00
0.00
30.35
30.35
27.66
27.66
0.00
0.00
49.57
49.57
47.76
47.76
54.86
54.86
49.98
49.98
47.95
47.95
59.06
59.06
68.55
68.55
66.71
66.71
0.00
0.00
70.70
70.70
66.24
66.24
0.00
0.00
0.00
0.00
87.01
87.01
85.86
85.86
90.52
90.52
86.37
86.37
89.30
89.30
Interest rate volatility
The values presented below represent the implicit volatilities (at the money) used for the valuation of
interest rate options:
Interest rate volatility
The values presented below represent the implicit volatilities (at the money) used for the valuation of interest rate options:
Interest rate volatility
The values presented below represent the implicit volatilities (at the money) used for the valuation of interest rate options:
1 year
1 year
3 years
3 years
5 years
5 years
7 years
7 years
10 years
10 years
15 years
15 years
EUR
EUR
23.16
23.16
55.79
55.79
65.81
65.81
68.34
68.34
68.98
68.98
66.28
66.28
31.12.2021
31.12.2021
USD
USD
73.74
73.74
59.15
59.15
56.88
56.88
54.59
54.59
50.93
50.93
-
-
31.12.2020
31.12.2020
USD
USD
118.44
118.44
91.12
91.12
84.06
84.06
65.41
65.41
62.77
62.77
-
-
EUR
EUR
15.39
15.39
21.33
21.33
28.38
28.38
34.60
34.60
41.18
41.18
46.54
46.54
(%)
(%)
GBP
GBP
-
-
-
-
-
-
-
-
-
-
-
-
GBP
GBP
76.14
76.14
63.57
63.57
71.17
71.17
79.98
79.98
88.08
88.08
-
-
Foreign exchange rates and volatility
Presented below, are the foreign exchange rates (European Central Bank) at the balance sheet date
and the implicit volatilities (at the money) for the main currencies used in the derivatives’ valuation:
88
88
410
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Foreign exchange rates and volatility
Presented below, are the foreign exchange rates (European Central Bank) at the balance sheet date and the implicit volatilities (at
the money) for the main currencies used in the derivatives’ valuation:
Foreign exchange rates and volatility
Presented below, are the foreign exchange rates (European Central Bank) at the balance sheet date and the implicit volatilities (at
the money) for the main currencies used in the derivatives’ valuation:
Volatility (%)
31.12.2021
31.12.2020
Foreign
exchange
rate
Foreign
exchange
1.1326
EUR/USD
31.12.2021
rate
EUR/GBP
0.8403
EUR/CHF
1.0331
1.1326
EUR/USD
9.9888
EUR/NOK
0.8403
EUR/GBP
EUR/PLN
4.5969
1.0331
EUR/CHF
85.3004
EUR/RUB
9.9888
EUR/NOK
USD/BRL a)
5.5713
EUR/PLN
4.5969
USD/TRY b)
85.3004
EUR/RUB
13.4500
USD/BRL a)
5.5713
a) Calculated based on EUR / USD and EUR / BRL exchange rates.
USD/TRY b)
b) Calculated based on EUR / USD and EUR / TRY exchange rates.
13.4500
1.2271
31.12.2020
0.8990
1.0802
1.2271
10.4703
0.8990
4.5597
1.0802
91.4671
10.4703
5.1940
4.5597
91.4671
7.4265
5.1940
7.4265
1 month 3 months 6 months 9 months
Volatility (%)
1 year
1 month 3 months 6 months 9 months
5.15
5.13
4.33
5.15
9.01
5.13
5.43
4.33
7.51
9.01
15.91
5.43
7.51
77.79
15.91
5.38
5.63
4.63
5.38
9.18
5.63
5.60
4.63
8.07
9.18
16.24
5.60
8.07
60.35
16.24
5.55
6.05
4.90
5.55
9.20
6.05
5.79
4.90
8.71
9.20
16.59
5.79
8.71
49.71
16.59
5.57
6.25
4.98
5.57
9.18
6.25
5.85
4.98
9.29
9.18
17.19
5.85
9.29
45.58
17.19
77.79
60.35
49.71
45.58
1 year
5.58
6.39
4.95
5.58
9.18
6.39
5.83
4.95
9.58
9.18
17.79
5.83
9.58
41.29
17.79
41.29
Regarding foreign exchange rates, the Bank uses in its valuation models the spot rate observed in the market at the moment of the
valuation.
a) Calculated based on EUR / USD and EUR / BRL exchange rates.
b) Calculated based on EUR / USD and EUR / TRY exchange rates.
Regarding foreign exchange rates, the Bank uses in its valuation models the spot rate observed in the
market at the moment of the valuation.
Regarding foreign exchange rates, the Bank uses in its valuation models the spot rate observed in the market at the moment of the
Equity indexes
valuation.
The table below presents the evolution of the main market equity indexes and their respective volatilities, used in the valuation of
equity derivatives:
Equity indexes
The table below presents the evolution of the main market equity indexes and their respective volatilities, used in the valuation of
equity derivatives:
Equity indexes
The table below presents the evolution of the main market equity indexes and their respective
volatilities, used in the valuation of equity derivatives:
Historical volatility
DJ Euro Stoxx 50
PSI 20
IBEX 35
DJ Euro Stoxx 50
FTSE 100
PSI 20
DAX
IBEX 35
S&P 500
FTSE 100
BOVESPA
DAX
S&P 500
BOVESPA
31.12.2021
% Change
31.12.2021
% Change
Quotation
31.12.2020
Quotation
31.12.2020
4 298
5 569
8 714
4 298
7 385
5 569
15 885
8 714
4 766
7 385
104 822
15 885
4 766
104 822
3 553
4 898
8 074
3 553
6 461
4 898
13 719
8 074
3 756
6 461
119 017
13 719
3 756
119 017
20.99%
13.70%
7.93%
20.99%
14.30%
13.70%
15.79%
7.93%
26.89%
14.30%
-11.93%
15.79%
26.89%
-11.93%
3 months
1 month
Historical volatility
17.81
24.38
3 months
1 month
14.68
13.34
18.20
23.88
17.81
24.38
12.21
16.62
14.68
13.34
16.10
21.77
18.20
23.88
13.84
18.23
12.21
16.62
23.76
21.59
16.10
21.77
13.84
18.23
23.76
21.59
Implied
Volatility
Implied
Volatility
-
-
-
-
11.96
-
13.76
-
12.53
11.96
24.48
13.76
12.53
24.48
The fair value of financial assets and liabilities recorded in the balance sheet at amortised cost is analysed as follows, having been
estimated based on the main methodologies and assumptions described below:
(in thousands of Euros)
The fair value of financial assets and liabilities recorded in the balance sheet at amortised cost is analysed as follows, having been
estimated based on the main methodologies and assumptions described below:
Fair Value
31 December 2021
Cash, cash balances at central bank and other demand deposits
Financial assets at amortised cost
Debt securities
31 December 2021
Loans and advances to credit institutions
Cash, cash balances at central bank and other demand deposits
Loans and advances to customers
Financial assets at amortised cost
Debt securities
Financial assets
Loans and advances to credit institutions
Loans and advances to customers
Financial liabilities measured at amortised cost
Deposits from Central Banks and other credit institutions
Financial assets
Due to customers
Financial liabilities measured at amortised cost
assets
Deposits from Central Banks and other credit institutions
Other financial liabilities
Due to customers
assets
Other financial liabilities
Financial liabilities
Debt securities issued, subordinated debt and liabilities associated to transferred
Financial liabilities
Debt securities issued, subordinated debt and liabilities associated to transferred
Assets / liabilities
recorded at
amortised cost
Assets / liabilities
recorded at
amortised cost
5 674 461
2 893 829
186 089
5 674 461
21 897 382
2 893 829
30 651 761
186 089
21 897 382
11 497 829
30 651 761
26 997 858
1 479 066
11 497 829
371 609
26 997 858
40 346 362
1 479 066
371 609
40 346 362
Quoted market prices
Valuation models
based on observable
market parameters
Fair Value
Valuation models
based on
unobservable market
parameters
Valuation models
(Stage 3)
based on
(in thousands of Euros)
Total fair value
411
(Stage 1)
Quoted market prices
Valuation models
(Stage 2)
based on observable
market parameters
(Stage 1)
1 065 084
-
-
-
-
-
-
-
-
-
-
-
-
1 065 084
1 065 084
1 065 084
1 736 200
1 736 200
1 736 200
332 194
186 089
5 674 461
-
332 194
6 192 744
186 089
11 532 025
6 192 744
11 532 025
11 532 025
-
-
-
-
-
-
-
unobservable market
parameters
Total fair value
5 674 461
(Stage 2)
(Stage 3)
-
-
-
-
-
1 729 846
22 263 293
1 729 846
23 993 139
22 263 293
23 993 139
26 997 858
44 451
-
371 609
26 997 858
27 413 918
44 451
371 609
5 674 461
3 127 124
186 089
5 674 461
22 263 293
3 127 124
31 250 967
186 089
22 263 293
11 532 025
31 250 967
26 997 858
1 780 651
11 532 025
371 609
26 997 858
40 682 143
1 780 651
371 609
89
89
1 736 200
11 532 025
27 413 918
40 682 143
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Foreign exchange rates and volatility
Presented below, are the foreign exchange rates (European Central Bank) at the balance sheet date and the implicit volatilities (at
the money) for the main currencies used in the derivatives’ valuation:
Foreign
exchange
rate
EUR/USD
EUR/GBP
EUR/CHF
EUR/NOK
EUR/PLN
EUR/RUB
USD/BRL a)
USD/TRY b)
31.12.2021
31.12.2020
1.1326
0.8403
1.0331
9.9888
4.5969
85.3004
5.5713
13.4500
1.2271
0.8990
1.0802
10.4703
4.5597
91.4671
5.1940
7.4265
a) Calculated based on EUR / USD and EUR / BRL exchange rates.
b) Calculated based on EUR / USD and EUR / TRY exchange rates.
Volatility (%)
1 month 3 months 6 months 9 months
1 year
5.15
5.13
4.33
9.01
5.43
7.51
15.91
77.79
5.38
5.63
4.63
9.18
5.60
8.07
16.24
60.35
5.55
6.05
4.90
9.20
5.79
8.71
16.59
49.71
5.57
6.25
4.98
9.18
5.85
9.29
17.19
45.58
5.58
6.39
4.95
9.18
5.83
9.58
17.79
41.29
Regarding foreign exchange rates, the Bank uses in its valuation models the spot rate observed in the market at the moment of the
The table below presents the evolution of the main market equity indexes and their respective volatilities, used in the valuation of
valuation.
Equity indexes
equity derivatives:
Quotation
Historical volatility
31.12.2021
31.12.2020
% Change
1 month
3 months
Implied
Volatility
DJ Euro Stoxx 50
PSI 20
IBEX 35
FTSE 100
DAX
S&P 500
BOVESPA
4 298
5 569
8 714
7 385
15 885
4 766
104 822
3 553
4 898
8 074
6 461
13 719
3 756
119 017
20.99%
13.70%
7.93%
14.30%
15.79%
26.89%
-11.93%
24.38
13.34
23.88
16.62
21.77
18.23
21.59
17.81
14.68
18.20
12.21
16.10
13.84
23.76
-
-
-
11.96
13.76
12.53
24.48
The fair value of financial assets and liabilities recorded in the balance sheet at amortised cost is
analysed as follows, having been estimated based on the main methodologies and assumptions
described below:
The fair value of financial assets and liabilities recorded in the balance sheet at amortised cost is analysed as follows, having been
estimated based on the main methodologies and assumptions described below:
31 December 2021
Cash, cash balances at central bank and other demand deposits
Financial assets at amortised cost
Debt securities
Loans and advances to credit institutions
Loans and advances to customers
Fair Value
(in thousands of Euros)
Assets / liabilities
recorded at
amortised cost
Quoted market prices
Valuation models
based on observable
market parameters
Valuation models
based on
unobservable market
parameters
Total fair value
(Stage 1)
(Stage 2)
(Stage 3)
5 674 461
2 893 829
186 089
21 897 382
-
5 674 461
-
5 674 461
1 065 084
-
-
332 194
186 089
-
1 729 846
-
22 263 293
3 127 124
186 089
22 263 293
Financial assets
30 651 761
1 065 084
6 192 744
23 993 139
31 250 967
Financial liabilities measured at amortised cost
Deposits from Central Banks and other credit institutions
Due to customers
Debt securities issued, subordinated debt and liabilities associated to transferred
assets
Other financial liabilities
11 497 829
26 997 858
1 479 066
371 609
-
-
11 532 025
-
1 736 200
-
-
-
-
26 997 858
44 451
371 609
11 532 025
26 997 858
1 780 651
371 609
Financial liabilities
40 346 362
1 736 200
11 532 025
27 413 918
40 682 143
Fair Value
(in thousands of Euros)
Assets / liabilities
recorded at
amortised cost
Quoted market prices
Valuation models
based on observable
market parameters
Valuation models
based on
unobservable market
parameters
Total fair value
89
(Stage 1)
(Stage 2)
(Stage 3)
31 December 2020
Cash, cash balances at central bank and other demand deposits
Financial assets at amortised cost
Debt securities
Loans and advances to credit institutions
Loans and advances to customers
Financial assets
Financial liabilities measured at amortised cost
Deposits from Central Banks and other credit institutions
Due to customers
Debt securities issued, subordinated debt and liabilities associated to transferred
assets
Other financial liabilities
2 524 868
2 873 753
245 472
21 685 258
27 329 351
10 778 468
25 778 507
974 996
364 013
-
2 524 868
-
2 524 868
839 673
-
-
839 673
378 588
245 472
-
1 887 104
-
21 930 569
3 105 365
245 472
21 930 569
3 148 928
23 817 673
27 806 274
-
-
10 819 077
-
1 143 995
-
-
-
-
25 778 507
44 451
364 013
10 819 077
25 778 507
1 188 446
364 013
Financial liabilities
37 895 984
1 143 995
10 819 077
26 186 971
38 150 043
Cash and deposits with Central Banks, Deposits with banks and Loans and advances to credit institutions and Deposits from Central
Banks.
Considering the short-term nature of these financial instruments, their carrying book value is a reasonable estimate of their fair value.
412
Securities at amortised cost
The fair value of securities recorded at fair value is estimated according to the methodologies used for the valuation of securities
recorded at fair value, as described at the beginning of the current Note.
Loans and advances to customers
The fair value of loans and advances to customers is estimated based on the discounted expected future cash flows of principal and
interest, assuming that the instalments are paid on the dates contractually defined. The expected future cash flows from portfolios of
loans with similar credit risk characteristics, such as residential mortgage loans, are estimated collectively on a portfolio basis. The
discount rates used by the Bank are the current interest rates used for loans with similar characteristics.
The fair value of deposits from Central Banks and Deposits from credit institutions is estimated based on the discounted expected
Deposits from credit institutions
future cash flows of principal and interest.
Due to customers
The fair value of these financial instruments is estimated based on the discounted expected future cash flows of principal and interest.
The discount rate used by the Bank is that which reflects the current interest rates applicable to deposits with similar characteristics
at the balance sheet date. Given that the interest rates applicable to these instruments are renewed for periods under one year, there
are no material relevant differences in their fair value.
Debt securities issued, Subordinated debt and liabilities associated to transferred assets
The fair value of these instruments is based on quoted market prices, when available. When not available, the Bank estimates their
fair value by discounting their expected future cash flows of principal and interest.
Other financial liabilities
These liabilities are short-term and therefore the book value is a reasonable estimate of their fair value.
90
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Cash and deposits with Central Banks, Deposits with banks and Loans and advances to credit
institutions and Deposits from Central Banks.
Considering the short-term nature of these financial instruments, their carrying book value is a
reasonable estimate of their fair value.
In the case where the information of the present annual report supports the information in the Market
Discipline report, this information is identified through references to this report as systematized in the
Annex VI of the Market Discipline Report.
Securities at amortised cost
The fair value of securities recorded at fair value is estimated according to the methodologies used for
the valuation of securities recorded at fair value, as described at the beginning of the current Note.
Loans and advances to customers
The fair value of loans and advances to customers is estimated based on the discounted expected future
cash flows of principal and interest, assuming that the instalments are paid on the dates contractually
defined. The expected future cash flows from portfolios of loans with similar credit risk characteristics,
such as residential mortgage loans, are estimated collectively on a portfolio basis. The discount rates
used by the Bank are the current interest rates used for loans with similar characteristics.
Deposits from credit institutions
The fair value of deposits from Central Banks and Deposits from credit institutions is estimated based
on the discounted expected future cash flows of principal and interest.
Due to customers
The fair value of these financial instruments is estimated based on the discounted expected future cash
flows of principal and interest. The discount rate used by the Bank is that which reflects the current
interest rates applicable to deposits with similar characteristics at the balance sheet date. Given that
the interest rates applicable to these instruments are renewed for periods under one year, there are no
material relevant differences in their fair value.
Debt securities issued, Subordinated debt and liabilities associated to transferred assets
The fair value of these instruments is based on quoted market prices, when available. When not
available, the Bank estimates their fair value by discounting their expected future cash flows of principal
and interest.
Other financial liabilities
These liabilities are short-term and therefore the book value is a reasonable estimate of their fair value.
NOTA 39 – RISK MANAGEMENT
The institutional area of the NOVO BANCO, S.A.’s website (www.novobanco.pt) presents the
information directed to investors, namely, NOVO BANCO, S.A., Market Discipline Report 2021 which
addresses the public disclosure obligations as defined in Part VIII of the Regulation n.º 575/2013 of the
European Parliament and the Council at 26 of July 2013 (CRR) and EBA guidelines transposed to the
Portuguese legislation through the Instruction n.º 5/2018 the Bank of Portugal.
39.1 - Framework
Risk is implicit in the banking business and, as such, novobanco is naturally exposed to several categories
of risks arising from external and internal factors, and which arise as a result of the characteristics of the
markets in which the Bank operates and the activities it carries out.
Thus, the risk management and control of novobanco is based on the following premises:
•
Independence from the other units of the group, in particular from the risk-taking units;
• Universality by application throughout novobanco;
•
Integrality of the risk culture, through a holistic vision and anticipation of its materialisation;
• 3 Lines of defense model, with the objective of adequately detecting, measuring, monitoring and
controlling the materially relevant risks to which novobanco is subject. This model implies that all
employees, in their sphere of activity, are responsible for risk management and control.
39.2 - Governance and risk management structure
Risk Management, being vital to the development of novobanco‘s activity, is centralized in the
Risk Management Function, composed by the Global Risk Department (DRG) and the Rating
Department (DRT), which defines the principles of risk management and control in a holistic manner,
in close coordination with the other second-tier units of novobanco, as well as with the Internal Audit
Department.
All materially relevant risks are reported to the respective Management and Supervisory Bodies
(EBD, GSB and both Risk and specialized Committees), which assume responsibility for supervising,
monitoring, evaluating and defining the Risk Appetite and the control principles implemented.
Operationally, the DRG centralizes the Risk Management Function of the novobanco, namely the
responsibilities inherent the function, supervising the Bank’s various materially relevant financial
institutions, ensuring independence from the business areas.
The Head of the Risk Management Function at novobanco is responsible for the DRG. In order to ensure
greater efficiency in liaison with the DRG, a local Risk Officer has been appointed in each relevant entity
of novobanco. The intervention of the DRG is direct or of coordination in articulation with the units that
assume the local Risk Management Function.
The risks identified as relevant and material are quantified as part of the Internal Capital Adequacy
Assessment Process (ICAAP) exercise, with the most relevant being:
• credit risk;
• market risk;
413
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes •
liquidity risk;
• operational risk.
The Risk Management Function also continuously monitors and evaluates ESG (Environmental, Social
and Governance) Risks in close coordination with the Sustainability area, which contributes specific
knowledge to the understanding of climate and environmental risk factors and social risk factors. ESG
factors, refer to climate and environmental, social or governance issues that may have a positive or
negative impact on the financial performance or on the creditworthiness of an entity, institution or
person.
The main guidelines for managing the risks identified above are presented below:
• credit risk: the management and control of this type of risk is supported by the use of an internal
system of risk identification, evaluation and quantification, as well as internal processes for
attributing ratings and scorings for portfolios and their continuous monitoring in specific decision
forums;
• market risk: existence of a specialized team that centralizes the management and control of market
risk and interest rate risk in the banking book (IRRBB) of the Bank, in line with the regulations and
good risk practices;
•
liquidity risk: based on the measurement of liquidity outflows from contractual and contingent
positions in normal and stressed situations, the management and control of this risk consists, on the
one hand, in determining the size of the liquidity pool available at each moment, and on the other
hand, in planning medium- and long-term stable financing sources;
• operational risk: the operational risk policies are defined by a specialized team of the DRG, there
are other units, such as the Compliance Department and the Information Security Office that
issue specific risk policies. The effectiveness of the methodologies for identifying and controlling
operating risk is guaranteed through the actions of the operating risk management representatives
appointed for each organic Unit, who promote a culture of risk in the first line of defense, in continuous
collaboration with the DRG.
39.3 - Credit risk
Credit risk results from the possibility of financial losses arising from the default of the client or
counterparty in relation to the contractual obligations established with the Bank within the scope of its
credit activity. Credit risk is essentially present in traditional banking products - loans, guarantees and
other contingent liabilities and derivatives. In credit default swaps (CDS), the net exposure between
protection seller and buyer positions on each entity underlying the transactions, constitutes credit
risk for NOVO BANCO. CDS are recorded at their fair value in accordance with the accounting policy
described in Note 6.10.6.
A permanent management of the credit portfolios is carried out, which favors interaction between
the various teams involved in risk management throughout the successive stages of the life of the
credit process. This approach is complemented by the introduction of continuous improvements both
in terms of methodologies and tools for risk assessment and control, as well as in terms of procedures
and decision circuits.
The monitoring of the Bank’s credit risk profile, namely the evolution of credit exposures and monitoring
of credit losses, is carried out regularly by the Risk Committee. The compliance with approved credit
limits and the correct functioning of the mechanisms associated with the approval of credit lines within
the scope of the current activity of the commercial areas are also subject to regular analysis.
Main events in 2021
The most relevant events during 2021 and with an impact on credit risk management policies and
procedures management policies and procedures consisted in the incorporation of specific adjustments
to ensure an adequate level of impairments on the universe of customers who ended the moratorium in
the second half of 2021.
In view of the COVID pandemic and the extension of its impact through 2021, it became imperative to
ensure that the level of provisioning level would remain adequate in a post-COVID context. The level
of uncertainty remains high regarding the economic recovery as well as the duration of the effects of
the pandemic in the sectors of economic activity most affected by the pandemic. This uncertainty has
become even more pressing on the universe that benefited from moratoria, namely in the ability to fully
resume and maintain compliance with their credit obligations after the end of the moratoria.
For this purpose, several quantitative and qualitative criteria were identified in addition to those
observed in the segmentation and segmentation and staging rules in force in the impairment model
and applied them to the universe of exposures that benefited from moratoria until the second half of
2021. By verifying these criteria, these exposures could see their original stage worsened and/or their
originally calculated and/or the risk notation itself considered for the purpose of calculating impairment.
Therefore, novobanco defined a set of 8 additional criteria for the universe of exposures that benefited
from the moratorium, on which it considered, for purposes of calculating impairment at December 2021,
a stage and/or a level of risk rating aggravated risk.
These criteria and the consequent adjustment are systematized in the table below:
414
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes representatives appointed for each organic Unit, who promote a culture of risk in the first line of defense, in continuous
collaboration with the DRG.
39.3 - Credit risk
Credit risk results from the possibility of financial losses arising from the default of the client or counterparty in relation to the
contractual obligations established with the Bank within the scope of its credit activity. Credit risk is essentially present in traditional
banking products - loans, guarantees and other contingent liabilities and derivatives. In credit default swaps (CDS), the net exposure
between protection seller and buyer positions on each entity underlying the transactions, constitutes credit risk for NOVO BANCO.
CDS are recorded at their fair value in accordance with the accounting policy described in Note 6.10.6.
A permanent management of the credit portfolios is carried out, which favors interaction between the various teams involved in risk
management throughout the successive stages of the life of the credit process. This approach is complemented by the introduction
of continuous improvements both in terms of methodologies and tools for risk assessment and control, as well as in terms of
procedures and decision circuits.
The monitoring of the Bank's credit risk profile, namely the evolution of credit exposures and monitoring of credit losses, is carried
out regularly by the Risk Committee. The compliance with approved credit limits and the correct functioning of the mechanisms
associated with the approval of credit lines within the scope of the current activity of the commercial areas are also subject to regular
analysis.
Main events in 2021
The most relevant events during 2021 and with an impact on credit risk management policies and procedures management policies
and procedures consisted in the incorporation of specific adjustments to ensure an adequate level of impairments on the universe of
customers who ended the moratorium in the second half of 2021.
In view of the COVID pandemic and the extension of its impact through 2021, it became imperative to ensure that the level of
provisioning level would remain adequate in a post-COVID context. The level of uncertainty remains high regarding the economic
recovery as well as the duration of the effects of the pandemic in the sectors of economic activity most affected by the pandemic.
This uncertainty has become even more pressing on the universe that benefited from moratoria, namely in the ability to fully resume
and maintain compliance with their credit obligations after the end of the moratoria.
For this purpose, several quantitative and qualitative criteria were identified in addition to those observed in the segmentation and
segmentation and staging rules in force in the impairment model and applied them to the universe of exposures that benefited from
moratoria until the second half of 2021. By verifying these criteria, these exposures could see their original stage worsened and/or
their originally calculated and/or the risk notation itself considered for the purpose of calculating impairment.
Therefore, novobanco defined a set of 8 additional criteria for the universe of exposures that benefited from the moratorium, on
which it considered, for purposes of calculating impairment at December 2021, a stage and/or a level of risk rating aggravated risk.
These criteria and the consequent adjustment are systematized in the table below:
Nº
1
2
3
4
5
6
7
8
Criteria
Debtors with credit more than 45 days overdue
Individuals with signs of Unlikely to Pay
Small companies with signs of Unlikely to Pay
Non-rated companies
Debtors with restructured credit due to financial difficulties
Individuals with signs of significant deterioration of credit risk
Debtors with a current rating at the threshold of significant deterioration of credit risk Stage 2 Classification
Risk rating downgrade
Small businesses with proposed downgrade of rating
Stage 3 Classification
Stage 3 Classification
Stage 3 Classification
Stage 2 rating and assigned the worst risk rating
Risk rating downgrade
Stage 2 classification and risk rating downgrade
Adjustment
The first three adjustments aimed to capture situations of debtors that, having benefited from a prolonged period of moratorium and
consequent increase in liquidity, presented defaults after this period and/or reduced financial capacity to resume their obligations.
The first three adjustments aimed to capture situations of debtors that, having benefited from a
prolonged period of moratorium and consequent increase in liquidity, presented defaults after this
period and/or reduced financial capacity to resume their obligations.
The remaining adjustments reflect situations of debtors who, also having benefited from a prolonged period of moratorium and
consequent increase in liquidity, present less serious signs than the first three groups. Not being situations of default, they are
situations of debtors who show signs of difficulty in fully complying with their responsibilities. their responsibilities. As it is not possible
to translate these difficulties into the Customer's final rating, the adjustment applied for purposes of calculating impairment is to
worsen the stage to 2 and/or consider an aggravated risk notation than the current one.
The exclusive impact of these adjustments was an increase in impairments of €16 million. This impact
was partially mitigated by the update of the macroeconomic scenarios that support the collective
impairment calculation through the forward-looking parameters.
This update occurred in 2021 and the macroeconomic scenarios were taken into account as described
in Note 39 - Activity Risk Management.
The remaining adjustments reflect situations of debtors who, also having benefited from a prolonged
period of moratorium and consequent increase in liquidity, present less serious signs than the first three
groups. Not being situations of default, they are situations of debtors who show signs of difficulty
in fully complying with their responsibilities. their responsibilities. As it is not possible to translate
these difficulties into the Customer’s final rating, the adjustment applied for purposes of calculating
impairment is to worsen the stage to 2 and/or consider an aggravated risk notation than the current
one.
The exclusive impact of these adjustments was an increase in impairments of €16 million. This impact was partially mitigated by the
The adjustments systematized above were incorporated into the collective impairment calculation as post-model adjustments and
update of the macroeconomic scenarios that support the collective impairment calculation through the forward-looking parameters.
simultaneously with the update of the calculation support scenarios, with the corresponding update of the forward-looking risk.
39.3.1 - Credit risk exposure
This update occurred in 2021 and the macroeconomic scenarios were taken into account as described in Note 39 - Activity Risk
Management.
novobanco maximum credit risk exposure is analyzed as follows:
92
The adjustments systematized above were incorporated into the collective impairment calculation as
post-model adjustments and simultaneously with the update of the calculation support scenarios,
with the corresponding update of the forward-looking risk.
39.3.1 - Credit risk exposure
novobanco maximum credit risk exposure is analyzed as follows:
Deposits with and loans and advances to banks
Derivatives for trading and fair value option derivatives
Securities held for trading
Securities at fair value through profit/loss - mandatory
Securities at fair value through other comprehensive income
Securities at amortised cost
Loans and advances to customers
Derivatives - hedge accounting
Other assets
Guarantees and standby letters provided
Documentary credits
Revocable and irrevocable commitments
Credit risk associated with the credit derivatives' reference entities
31.12.2021
31.12.2020
Gross value
Impairment
Net Value
Gross value
Impairment
Net Value
(in thousands of Euros)
452 884
263 244
114 465
559 227
7 083 966
3 138 465
23 165 062
2 250 308
783 245
2 221 575
402 332
5 849 281
-
( 1 183)
-
-
-
( 3 668)
( 247 772)
(1 235 757)
-
( 165 832)
( 79 339)
-
( 12 436)
-
451 701
263 244
114 465
559 227
7 080 298
2 890 693
21 929 305
2 250 308
617 413
2 142 236
402 332
5 836 845
-
585 371
388 311
267 016
647 082
7 759 224
3 077 342
23 332 108
13 606
621 407
2 815 920
410 292
7 049 445
4 798
( 250 153)
-
-
-
( 3 660)
( 202 460)
(1 587 003)
-
( 165 340)
( 91 905)
-
( 9 579)
-
335 218
388 311
267 016
647 082
7 755 564
2 874 882
21 745 105
13 606
456 067
2 724 015
410 292
7 039 866
4 798
46 284 054
(1 745 987)
44 538 067
46 971 922
(2 310 100)
44 661 822
For financial assets in the balance sheet, the maximum exposure to credit risk is represented by the accounting net book value. For
the off-balance sheet elements, the maximum exposure of the guarantees is the maximum amount that the Bank would have to pay if
the guarantees were executed. For loan commitments and other credit-related commitments of an irrevocable nature, the maximum
exposure is the total amount of the commitments assumed.
Impairment is calculated on a collective or individual basis in accordance with the accounting policy described in Note 6.16. Whenever
the value of the collateral, net of haircuts (taking into account the type of collateral), equals or exceeds the exposure, the individual
impairment may be nil. Hence, the Bank does not have any overdue financial assets for which it has not performed a review regarding
415
their recoverability and the subsequent impairment recognition, when necessary.
39.3.2 – Impairment Models scenarios
The exercise of build the base and alternative macroeconomic scenarios for the Portuguese economy is based on a combination of
econometric forecasts, information on forecasts from other external institutions and application of subjective expert judgment.
In the first component, GDP growth is estimated through estimates for the growth of expenditure components, obtaining GDP through
the formula GDP = Consumption + Investment + Exports - Imports. The econometric specifications chosen are those that, after testing
different alternatives, generate the best result.
The econometric estimates thus obtained are then weighted with forecasts from external institutions, according to the principle that
the combination of different projections tends to be more accurate than just a forecast (the risk of errors and bias associated with
specific methods and variables is minimized).
The forecasts for prices (consume and real estate) and unemployment follow a similar methodology: own forecasts based on an
estimated model, weighted with forecasts from external institutions, if available. In a base scenario, the projections for interest rates
start from market expectations (provided by Bloomberg), with possible adjustments in accordance with the principles defined above,
if considered appropriate (weighting by expert judgment and forecasts from external institutions). The alternative scenarios are based
on the historical observation of deviations from the trend in GDP behavior (cost and contraction cycles), the reference of EBA
recommendations for extreme adverse scenarios, the stylized facts of economic cycles, with respect to the components of
expenditure, prices, unemployment, etc. and estimates.
Thus, when revising / updating the scenarios, the respective probabilities of execution are also reviewed. Once the scenarios are
updated, the values of the risk parameters are updated for later consideration in the scope of the Impairment calculation. The final
impairment calculated will thus result from the sum of the impairment value of each scenario, weighted by the respective probability
Currently, 3 scenarios are considered for the calculation of impairment on a collective basis: base case, downside case (or adverse)
and an upside case. The scenarios considered and the respective evolution of the main macroeconomic variables are described in
of execution.
the tables below:
93
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
For financial assets in the balance sheet, the maximum exposure to credit risk is represented by
the accounting net book value. For the off-balance sheet elements, the maximum exposure of the
guarantees is the maximum amount that the Bank would have to pay if the guarantees were executed.
For loan commitments and other credit-related commitments of an irrevocable nature, the maximum
exposure is the total amount of the commitments assumed.
Impairment is calculated on a collective or individual basis in accordance with the accounting policy
described in Note 6.16. Whenever the value of the collateral, net of haircuts (taking into account the
type of collateral), equals or exceeds the exposure, the individual impairment may be nil. Hence, the
Bank does not have any overdue financial assets for which it has not performed a review regarding
their recoverability and the subsequent impairment recognition, when necessary.
39.3.2 – Impairment Models scenarios
The exercise of build the base and alternative macroeconomic scenarios for the Portuguese economy
is based on a combination of econometric forecasts, information on forecasts from other external
institutions and application of subjective expert judgment.
In the first component, GDP growth is estimated through estimates for the growth of expenditure
components, obtaining GDP through the formula GDP = Consumption + Investment + Exports - Imports.
The econometric specifications chosen are those that, after testing different alternatives, generate
the best result.
The econometric estimates thus obtained are then weighted with forecasts from external institutions,
according to the principle that the combination of different projections tends to be more accurate than
just a forecast (the risk of errors and bias associated with specific methods and variables is minimized).
The forecasts for prices (consume and real estate) and unemployment follow a similar methodology:
own forecasts based on an estimated model, weighted with forecasts from external institutions,
if available. In a base scenario, the projections for interest rates start from market expectations
(provided by Bloomberg), with possible adjustments in accordance with the principles defined above,
if considered appropriate (weighting by expert judgment and forecasts from external institutions).
The alternative scenarios are based on the historical observation of deviations from the trend in GDP
behavior (cost and contraction cycles), the reference of EBA recommendations for extreme adverse
scenarios, the stylized facts of economic cycles, with respect to the components of expenditure,
prices, unemployment, etc. and estimates.
Thus, when revising / updating the scenarios, the respective probabilities of execution are also reviewed.
Once the scenarios are updated, the values of the risk parameters are updated for later consideration in
the scope of the Impairment calculation. The final impairment calculated will thus result from the sum
of the impairment value of each scenario, weighted by the respective probability of execution.
Currently, 3 scenarios are considered for the calculation of impairment on a collective basis: base case,
downside case (or adverse) and an upside case. The scenarios considered and the respective evolution
of the main macroeconomic variables are described in the tables below:
A - Base Scenario, with a relative weight of 60%.
A - Base Scenario, with a relative weight of 60%
GDP
Private Consumption
Government Expenditure
Investment
Exports
Imports
Domestic Demand
GDP
Private Consumption
Government Expenditure
Investment
Exports
Imports
Domestic Demand
Net External Demand
Prices
Unit
Real growth %
Real growth %
Real growth %
Real growth %
Real growth %
Real growth %
Real growth %
2019
2.7
3.0
2.1
3.2
4.1
4.9
3.1
2020
-8.4
-5.5
0.4
-5.7
-18.6
-12.1
-5.6
2021
4.5
2022
5.3
2023
2.4
2024
2.2
4.5
4.3
5.3
9.3
9.5
4.6
4.6
1.8
8.2
10.1
8.5
4.8
2.3
0.3
5.6
4.9
5.1
2.6
2.1
0.3
4.9
4.5
4.7
2.3
EUR mn (real)
203 854
186 645
194 971
205 317
210 330
214 962
EUR mn (real)
132 018
122 677
128 197
134 095
137 179
140 059
EUR mn (real)
EUR mn (real)
EUR mn (real)
EUR mn (real)
33 772
36 795
88 102
86 751
33 918
34 680
71 683
76 229
35 376
36 518
78 350
83 471
36 013
39 513
86 263
90 566
36 121
41 725
90 490
95 185
36 230
43 770
94 562
99 658
EUR mn (real)
202 585
191 275
200 092
209 620
215 025
220 059
EUR mn (real)
1 351
-4 546
-5 121
-4 303
-4 695
-5 097
CPI
Real Estate (Residential)
Real Estate (Commercial)
Equity prices (incremental change)
%
%
%
%
0.3
9.6
1.9
10.2
6.6
0.0
8.4
1.7
-6.1
7.0
1.2
6.6
1.5
15.0
6.9
1.9
3.7
2.3
0.0
6.6
1.6
2.5
1.6
0.0
6.4
1.7
2.0
1.4
0.0
6.3
EUR mn (nominal)
147 925
146 873
154 364
160 692
165 192
169 322
EUR mn (nominal)
10 663
18 820
17 131
14 420
13 012
11 149
Unemployment
Households Disposable Income
Households Savings
Households Savings Rate
Household Investment (GFCF)
Non Fin Corporations Gross Disposable Income (Savings)
Non Financial Corporations Investment
% labour force
% Disp Income
EUR mn (nominal)
EUR mn (nominal)
EUR mn (nominal)
Capital Transfers - net acquisition/disposal of assets (non-financial & non-produced)
EUR mn (nominal)
Non Financial Corporations Financing Capacity
EUR mn (nominal)
7.2
8 472
19 452
26 905
352
-7 101
12.8
8 224
16 062
24 142
2 398
-5 682
11.1
8 553
20 302
26 508
2 800
-3 406
9.0
8 904
21 541
28 337
4 900
-1 896
7.9
9 171
22 381
29 612
4 900
-2 331
6.6
9 372
23 209
30 500
4 100
-3 191
-10.3
9.8
6.9
4.5
3.0
Euribor (annual average)
Sovereign Yields (average)
10Y PGB-Bund spread
10Y-2Y PGB Spread
Unit
2019
2020
2021
2022
2023
2024
3-month
end-of-period
6-month
end-of-period
12-month
end-of-period
Bund 10Y
end-of-period
PGB 10Y
end-of-period
PGB 2Y
end-of-period
Annual Average
end-of-period
Annual Average
end-of-period
%
%
%
%
%
%
%
%
%
%
%
%
bps
bps
bps
bps
-0.36
-0.38
-0.30
-0.32
-0.22
-0.25
-0.21
-0.19
0.77
0.44
-0.42
-0.55
98
63
119
99
-0.43
-0.55
-0.37
-0.53
-0.31
-0.50
-0.47
-0.57
0.42
0.03
-0.42
-0.73
89
60
84
76
-0.54
-0.50
-0.51
-0.48
-0.45
-0.42
-0.23
-0.10
0.30
0.52
-0.57
-0.51
53
62
87
103
-0.43
-0.35
-0.41
-0.33
-0.37
-0.31
-0.03
0.05
0.71
0.90
-0.31
-0.10
74
85
102
100
-0.17
0.01
-0.15
0.03
-0.13
0.05
0.11
0.17
1.01
1.12
0.00
0.10
90
95
101
102
0.05
0.09
0.07
0.11
0.09
0.13
0.21
0.24
1.16
1.19
0.13
0.15
95
95
103
104
416
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes The baseline macroeconomic scenario translates into a projection of the Gross Domestic Product to fully
recover in 2022 the level it had in 2019, continuing with moderate growth in 2023 and 2024. Regarding
reference rates, the EURIBOR would remain with negative values in 2022, although projecting with
signs of returning to positive values at the end of 2023, a fact that would benefit the results of the
financial sector - if low values of cost of risk persist.
The less favourable - or adverse - macroeconomic scenario considers that the effects of the COVID
pandemic will still be felt in 2022, leading to a recession that translates into a 4% drop in Gross Domestic
Product in 2022, registering tenuous growth in this variable only in 2024. Regarding reference rates,
the EURIBOR would remain with negative values in all years of the projection.
C - Most favourable scenario, with a relative weight of 10%
B - Less favorable / adverse scenario, with a relative weight of 30%
B - Less favourable / adverse scenario, with a relative weight of 30%
C - Most favourable scenario, with a relative weight of 10%
GDP
Private Consumption
Government Expenditure
Investment
Exports
Imports
Domestic Demand
GDP
Private Consumption
Government Expenditure
Investment
Exports
Imports
Domestic Demand
Net External Demand
Prices
Unit
Real growth %
Real growth %
Real growth %
Real growth %
Real growth %
Real growth %
Real growth %
2019
2.7
3.0
2.1
3.2
4.1
4.9
3.1
2020
-8.4
-5.5
0.4
-5.7
-18.6
-12.1
-5.6
2021
4.5
4.5
4.3
5.3
9.3
9.5
4.6
2022
-4.0
-4.4
0.8
-3.7
-14.3
-12.1
-3.4
2023
-1.6
2024
0.5
-1.9
0.6
-0.6
-8.8
-7.2
-1.2
1.0
0.3
1.6
4.5
5.4
1.0
EUR mn (real)
203 854
186 645
194 971
187 158
184 206
185 154
EUR mn (real)
132 018
122 677
128 197
122 557
120 228
121 430
EUR mn (real)
EUR mn (real)
EUR mn (real)
EUR mn (real)
33 772
36 795
88 102
86 751
33 918
34 680
71 683
76 229
35 376
36 518
78 350
83 471
35 659
35 167
67 146
73 371
35 873
34 956
61 237
68 088
35 981
35 515
63 992
71 765
EUR mn (real)
202 585
191 275
200 092
193 383
191 058
192 927
EUR mn (real)
1 351
-4 546
-5 121
-6 225
-6 851
-7 772
CPI
Real Estate (Residential)
Real Estate (Commercial)
Equity prices (incremental change)
%
%
%
%
0.3
9.6
1.9
10.2
0.0
8.4
1.7
-6.1
1.4
6.6
1.5
15.0
1.6
-11.5
-13.0
-50.0
-0.4
-8.5
-9.6
-0.1
-4.3
-4.9
-45.0
-35.0
GDP
Private Consumption
Government Expenditure
Investment
Exports
Imports
Domestic Demand
GDP
Private Consumption
Government Expenditure
Investment
Exports
Imports
Domestic Demand
Net External Demand
Prices
% labour force
6.6
7.0
6.9
10.3
11.6
11.9
EUR mn (nominal)
147 925
146 873
154 364
150 813
149 607
150 953
EUR mn (nominal)
10 663
18 820
16 860
17 257
19 112
19 285
Unemployment
Households Disposable Income
Households Savings
Households Savings Rate
Household Investment (GFCF)
Non Fin Corporations Gross Disposable Income (Savings)
Non Financial Corporations Investment
Capital Transfers - net acquisition/disposal of assets (non-financial & non-produced)
Non Financial Corporations Financing Capacity
% Disp Income
EUR mn (nominal)
EUR mn (nominal)
EUR mn (nominal)
EUR mn (nominal)
EUR mn (nominal)
% GDP
Unit
Euribor (annual average)
Sovereign Yields (average)
10Y PGB-Bund spread
10Y-2Y PGB Spread
3-month
end-of-period
6-month
end-of-period
12-month
end-of-period
Bund 10Y
PGB 10Y
PGB 2Y
Annual Average
Annual Average
%
%
%
%
%
%
%
%
%
bps
bps
7.2
8 472
19 452
26 905
352
-7 101
-3.3
2019
-0.36
-0.38
-0.30
-0.32
-0.22
-0.25
-0.21
0.77
-0.42
98
119
12.8
8 224
16 062
24 142
2 398
-5 682
-2.8
2020
-0.43
-0.55
-0.37
-0.53
-0.31
-0.50
-0.47
0.42
-0.42
89
84
10.9
8 553
20 302
26 508
2 800
-3 406
-1.6
2021
-0.54
-0.50
-0.51
-0.48
-0.45
-0.42
-0.23
0.30
-0.57
53
87
11.4
8 065
19 531
24 228
2 400
-2 297
-1.1
2022
-0.55
-0.60
-0.53
-0.58
-0.49
-0.55
-0.43
0.94
0.02
12.8
7 832
19 257
23 308
2 200
-1 850
-0.9
2023
-0.60
-0.60
-0.58
-0.58
-0.55
-0.55
-0.73
1.35
0.53
12.8
7 879
19 546
23 680
2 200
-1 934
-0.9
2024
-0.58
-0.55
-0.55
-0.52
-0.53
-0.50
-0.70
1.33
0.50
136
208
203
92
83
83
Unit
Real growth %
Real growth %
Real growth %
Real growth %
Real growth %
Real growth %
Real growth %
2019
2.7
3.0
2.1
3.2
4.1
4.9
3.1
2020
-8.4
-5.5
0.4
-5.7
-18.6
-12.1
-5.6
2021
4.7
2022
6.7
2023
3.9
2024
3.2
5.1
4.6
4.9
9.5
10.1
5.0
6.3
0.5
14.3
20.4
19.6
6.7
3.5
0.4
9.2
21.1
20.6
4.1
2.8
0.4
7.1
13.2
12.8
3.3
EUR mn (real)
203 854
186 645
195 356
208 421
216 449
223 399
EUR mn (real)
132 018
122 677
128 934
137 056
141 853
145 825
EUR mn (real)
EUR mn (real)
EUR mn (real)
EUR mn (real)
33 772
36 795
88 102
86 751
33 918
34 680
71 683
76 229
35 478
36 379
78 493
83 928
35 656
41 582
94 505
35 798
45 407
35 941
48 631
114 446
129 553
100 378
121 056
136 551
EUR mn (real)
202 585
191 275
200 791
214 294
223 059
230 398
EUR mn (real)
1 351
-4 546
-5 435
-5 873
-6 610
-6 998
CPI
Real Estate (Residential)
Real Estate (Commercial)
Equity prices (incremental change)
%
%
%
%
0.3
9.6
1.9
10.2
0.0
8.4
1.7
-6.1
7.0
1.3
8.3
1.5
13.7
1.4
4.9
1.8
15.0
1.7
4.0
1.6
1.9
3.6
1.4
20.0
25.0
6.6
5.7
5.5
5.3
% labour force
6.6
EUR mn (nominal)
147 925
146 873
154 364
163 625
170 170
175 616
EUR mn (nominal)
10 663
18 820
16 343
14 563
13 268
11 094
Unemployment
Households Disposable Income
Households Savings
Households Savings Rate
Household Investment (GFCF)
Non Fin Corporations Gross Disposable Income (Savings)
Non Financial Corporations Investment
% Disp Income
EUR mn (nominal)
EUR mn (nominal)
EUR mn (nominal)
Capital Transfers - net acquisition/disposal of assets (non-financial & non-produced)
EUR mn (nominal)
Non Financial Corporations Financing Capacity
Euribor (annual average)
EUR mn (nominal)
% GDP
Unit
Sovereign Yields (average)
10Y PGB-Bund spread
10Y-2Y PGB Spread
3-month
end-of-period
6-month
end-of-period
12-month
end-of-period
Bund 10Y
end-of-period
PGB 10Y
end-of-period
PGB 2Y
end-of-period
Annual Average
end-of-period
Annual Average
end-of-period
%
%
%
%
%
%
%
%
%
%
%
%
bps
bps
bps
bps
7.2
8 472
19 452
26 905
352
-7 101
-3.3
2019
-0.36
-0.38
-0.30
-0.32
-0.22
-0.25
-0.21
-0.19
0.77
0.44
-0.42
-0.55
98
63
119
99
12.8
8 224
16 062
24 142
2 398
-5 682
-2.8
2020
-0.43
-0.55
-0.37
-0.53
-0.31
-0.50
-0.47
-0.57
0.42
0.03
-0.42
-0.73
89
60
84
76
10.6
8 553
20 302
26 508
2 800
-3 406
-1.6
2021
-0.55
-0.57
-0.52
-0.55
-0.49
-0.50
-0.31
-0.18
0.29
0.47
-0.65
-0.66
60
65
94
113
8.9
8 981
21 987
28 894
2 900
-4 006
-1.7
2022
-0.36
-0.15
-0.34
-0.13
-0.25
0.00
0.09
0.35
0.74
1.00
-0.31
0.05
65
65
104
95
7.8
9 385
23 571
30 772
2 900
-4 301
-1.8
2023
6.3
9 751
24 820
32 495
2 800
-4 875
-1.9
2024
0.10
0.35
0.12
0.37
0.21
0.42
0.58
0.80
1.18
1.35
0.21
0.37
60
55
97
98
0.64
0.93
0.67
0.96
0.74
1.05
1.09
1.38
1.57
1.78
0.56
0.74
48
40
101
104
417
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes The most favourable macroeconomic scenario is similar to the baseline scenario, differing in general
by considering that the recovery of the economy will be at higher levels. In this scenario, the Gross
Domestic Product projection for 2022 would reach 6.7% and grow above 3% in 2023 and 2024.
Regarding reference rates, the EURIBOR would remain at negative values in 2022, also returning to
positive values at the end of 2023.
39.3.3 - Impairment Models
39.3.3 - Impairment Models
As at 31 December 2021 and 2020, the detail of the amount of gross credit exposure and impairment assessed individually and
As at 31 December 2021 and 2020, the detail of the amount of gross credit exposure and impairment assessed individually and
collectively, by segment was as follows:
collectively, by segment was as follows:
39.3.3 - Impairment Models
As at 31 December 2021 and 2020, the detail of the amount of gross credit exposure and impairment
assessed individually and collectively, by segment was as follows:
Corporate
Corporate
Mortgage loans
Mortgage loans
Consumer and other loans
Consumer and other loans
Individual Assessment (1)
Individual Assessment (1)
Exposure
Impairment
Impairment
Exposure
31.12.2021
31.12.2021
Collective Assessment (2)
Collective Assessment (2)
Exposure
Impairment
Impairment
Exposure
(in thousands of Euros)
(in thousands of Euros)
Total
Total
Exposure
Exposure
Impairment
Impairment
1 295 586
1 295 586
2 956
2 956
147 997
147 997
623 390
623 390
145
145
132 353
132 353
12 270 141
12 270 141
8 330 890
8 330 890
1 117 492
1 117 492
390 865
390 865
44 480
44 480
44 524
44 524
13 565 727
13 565 727
8 333 846
8 333 846
1 265 489
1 265 489
1 014 255
1 014 255
44 625
44 625
176 877
176 877
Total
Total
(1) Loans and advances for which the final impairment was determined and approved by the Impairment Committee
(1) Loans and advances for which the final impairment was determined and approved by the Impairment Committee
(2) Loans and advances for which the final impairment was determined according to the calculation rules of the collective impairment model
(2) Loans and advances for which the final impairment was determined according to the calculation rules of the collective impairment model
21 718 523
21 718 523
1 446 539
1 446 539
755 888
755 888
479 869
479 869
Individual Assessment (1)
Individual Assessment (1)
Exposure
Impairment
Impairment
Exposure
31.12.2020
31.12.2020
Collective Assessment (2)
Collective Assessment (2)
Exposure
Impairment
Impairment
Exposure
23 165 062
23 165 062
1 235 757
1 235 757
(in thousands of Euros)
(in thousands of Euros)
Total
Total
Exposure
Exposure
Impairment
Impairment
Corporate
Corporate
Mortgage loans
Mortgage loans
Consumer and other loans
Consumer and other loans
1 666 138
1 666 138
4 368
4 368
155 734
155 734
958 934
958 934
212
212
136 305
136 305
12 057 069
12 057 069
8 390 178
8 390 178
1 058 621
1 058 621
388 758
388 758
52 649
52 649
50 145
50 145
13 723 207
13 723 207
8 394 546
8 394 546
1 214 355
1 214 355
1 347 692
1 347 692
52 861
52 861
186 450
186 450
Total
Total
(1) Loans and advances for which the final impairment was determined and approved by the Impairment Committee
(1) Loans and advances for which the final impairment was determined and approved by the Impairment Committee
(2) Loans and advances for which the final impairment was determined according to the calculation rules of the collective impairment model
(2) Loans and advances for which the final impairment was determined according to the calculation rules of the collective impairment model
21 505 868
21 505 868
1 826 240
1 826 240
1 095 451
1 095 451
491 552
491 552
23 332 108
23 332 108
1 587 003
1 587 003
In the case of loans analyzed by the Impairment Committee for which the impairment determined
automatically by the Impairment Model was not changed, they are included and presented in the
“Collective evaluation”.
As at 31 December 2021 and 2020, the detail of the amount of gross credit exposure and impairment assessed individually and
As at 31 December 2021 and 2020, the detail of the amount of gross credit exposure and impairment assessed individually and
collectively by geography was as follows:
collectively by geography was as follows:
As at 31 December 2021 and 2020, the detail of the amount of gross credit exposure and impairment
assessed individually and collectively by geography was as follows:
In the case of loans analyzed by the Impairment Committee for which the impairment determined automatically by the Impairment
In the case of loans analyzed by the Impairment Committee for which the impairment determined automatically by the Impairment
Model was not changed, they are included and presented in the "Collective evaluation".
Model was not changed, they are included and presented in the "Collective evaluation".
Country
Country
Individual Assessment *
Individual Assessment *
Colective Assessment **
Colective Assessment **
Total
Total
Exposure
Exposure
Impairment
Impairment
Exposure
Exposure
Impairment
Impairment
Exposure
Exposure
Impairment
Impairment
31.12.2021
31.12.2021
(in thousands of Euros)
(in thousands of Euros)
Portugal
Portugal
Spain
Spain
United Kingdom
United Kingdom
France
France
Switzerland
Switzerland
Luxembourg
Luxembourg
Others
Others
1 274 884
1 274 884
58 906
58 906
-
-
-
-
-
-
-
-
112 749
112 749
670 486
670 486
8 008
8 008
-
-
-
-
-
-
-
-
77 394
77 394
19 284 575
19 284 575
563 112
563 112
299 164
299 164
261 577
261 577
228 949
228 949
261 664
261 664
819 482
819 482
431 798
431 798
13 475
13 475
11 814
11 814
3 347
3 347
1 761
1 761
2 535
2 535
15 139
15 139
20 559 459
20 559 459
622 018
622 018
299 164
299 164
261 577
261 577
228 949
228 949
261 664
261 664
932 231
932 231
1 446 539
Total
1 446 539
Total
* Loans and advances for which the final impairment was determined and approved by the Impairment Committee
* Loans and advances for which the final impairment was determined and approved by the Impairment Committee
** Loans and advances for which the final impairment was determined according to the calculation rules of the collective impairment model
** Loans and advances for which the final impairment was determined according to the calculation rules of the collective impairment model
21 718 523
21 718 523
479 869
479 869
755 888
755 888
23 165 062
23 165 062
1 102 284
1 102 284
21 483
21 483
11 814
11 814
3 347
3 347
1 761
1 761
2 535
2 535
92 533
92 533
1 235 757
1 235 757
97
97
418
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Country
Individual Assessment *
Colective Assessment **
Total
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
31.12.2020
(in thousands of Euros)
Portugal
Luxembourg
United Kingdom
Spain
Cayman Islands
Ireland
Others
1 620 153
29 762
945 643
17 762
-
-
-
-
-
-
-
-
176 325
132 046
19 460 490
407 101
261 837
249 092
218 943
164 976
743 429
451 730
13 001
6 599
3 294
1 531
2 024
13 373
Total
1 826 240
* Loans and advances for which the final impairment was determined and approved by the Impairment Committee
21 505 868
1 095 451
491 552
21 080 643
1 397 373
436 863
261 837
249 092
218 943
164 976
919 754
30 763
6 599
3 294
1 531
2 024
145 419
23 332 108
1 587 003
** Loans and advances for which the final impairment was determined according to the calculation rules of the collective impairment model
39.3.3.1 - Individual impairment analysis
39.3.3.1 - Individual impairment analysis
The Individual Credit Analysis comprises a staging analysis and an individual impairment quantification
analysis. The staging analysis is performed for debtors previously classified as stage 1 and stage 2, with
the purpose of evaluating the adequacy of the assigned stage with additional information obtained
on an individual basis. The individual impairment quantification analysis aims to determine the most
appropriate impairment rate for each credit customer, regardless of the amount resulting from the
Collective Impairment Model. Clients for which, after conducting individual analysis, it is not concluded
The Individual Credit Analysis comprises a staging analysis and an individual impairment quantification analysis. The staging analysis
is performed for debtors previously classified as stage 1 and stage 2, with the purpose of evaluating the adequacy of the assigned
stage with additional information obtained on an individual basis. The individual impairment quantification analysis aims to determine
the most appropriate impairment rate for each credit customer, regardless of the amount resulting from the Collective Impairment
Model. Clients for which, after conducting individual analysis, it is not concluded that there is an objective loss of impairment are
maintained in the Collective Impairment Model. The Individual Analysis of the selected clients is carried out based on the information
provided by the Commercial Structures regarding the client / Bank's framework, historical and forecast cash flows (when available)
and existing collateral.
that there is an objective loss of impairment are maintained in the Collective Impairment Model. The
Individual Analysis of the selected clients is carried out based on the information provided by the
Commercial Structures regarding the client / Bank’s framework, historical and forecast cash flows
(when available) and existing collateral.
The scheme below is illustrative of the individual credit analysis to be carried out for the purpose of
concluding on the classification in terms of staging of debtors:
The scheme below is illustrative of the individual credit analysis to be carried out for the purpose of concluding on the classification
in terms of staging of debtors:
Yes
Individual Analysis
The debt holder is classified in
Stage 1 or Stage 2?
No
Staging Analysis
Quantification of individual impairment (Stage 3)
Individual analysis of credit classified in stage 1 and stage 2 with the purpose of assessing the adequacy of the
stage from the model taking into account qualitative information available, the results of the analysis of staging
questionnares and specific information on the debtor’s ability to generate enough cash flow to service debt service
Credit analysis to quantify impairment on an individual basis using one of the
following methodologies (or combination of both): (i) going concern and (ii)
gone concern
Are the expected future cash flows for the debtor materialy
impacted and insufficient to cover the debt service?
Yes
No
Collective Impairment
Selection Criteria
Individual Analysis (staging analysis and, when applicable, quantification of individual impairment) should be carried out for the
borrowers who:
Register Stage 3 exposure equal to or greater than Euro 1,000,000;
Register Stage 2 exposure equal to or greater than Euro 5,000,000;
Register Stage 2 exposure equal to or greater than Euro 1,000,000 and have no rating assigned;
Register Stage 1 exposure equal to or greater than Euro 5,000,000 and have no rating assigned;
Register Stage 1 exposure equal or greater than Euro 25,000,000 (individually significant exposure);
98
419
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Selection Criteria
Individual Analysis (staging analysis and, when applicable, quantification of individual impairment)
should be carried out for the borrowers who:
The Individual Impairment quantification analysis determines, for each period, the best recovery
scenario, aligning the commercial strategies defined for the client, with the different recovery
possibilities. When, due to lack of information, it is not possible to identify or update the recovery
scenario, the previous rate is maintained, and a new date is set for the client’s review.
• Register Stage 3 exposure equal to or greater than Euro 1,000,000;
• Register Stage 2 exposure equal to or greater than Euro 5,000,000;
39.3.3.2 - Collective Model
• Register Stage 2 exposure equal to or greater than Euro 1,000,000 and have no rating assigned;
• Register Stage 1 exposure equal to or greater than Euro 5,000,000 and have no rating assigned;
• Register Stage 1 exposure equal or greater than Euro 25,000,000 (individually significant exposure);
• Fit into the Financial Holding risk segment and register exposure equal to or greater than Euro
5,000,000;
• Fit into the Real Estate risk segment and register exposure equal to or greater than Euro 5,000,000;
• Are identified by the Committee itself based on other criteria that justify (e.g., sector of activity);
•
•
In the past, specific impairment has been attributed to them;
In the face of any new element that may have an impact on the calculation of impairment, be
proposed for analysis by one of the stakeholders of the Impairment Committee or by another Body.
The identification of the target customers for Individual Analysis will be updated monthly, in order
to contemplate any changes that may occur throughout the year. The Committee analysis of the
customers identified in the previous paragraph will be carried out in the month in which:
• The client registers, for the first time, one of the selection criteria for Individual Impairment Analysis,
mentioned in the previous paragraph;
• Expiry of the Analysis expiration date;
•
Its analysis is requested by one of the participants of the Impairment Committee or by another Body.
The Individual Impairment Analysis can be carried out for individual customers but should whenever be
possible consider the Economic Group view of the selected customers.
Rules of Operation
The Individual Analysis of the selected clients is carried out based on the information provided by the
Commercial Units regarding the client / Bank’s framework, historical and forecast cash flows (when
available) and existing collateral. For the analysis of the impairment quantification on an individual
basis, a scenario is established that is expected to recover credit: through the continuity of the
client’s business or through the execution of the collateral. If this analysis results in no impairment
being necessary, the impairment will be determined by collective analysis, that is, by the collective
impairment model (except for cases with objective evidence of loss / Default, in which the final rate will
have to be defined).
In line with the principles set out in accounting standard IFRS9, an entity should use information
about past events, current conditions and forecasts of future economic conditions in estimating
risk parameters. The historical information should accurately capture current conditions and, when
measuring expected credit losses, the maximum period to be considered should be the maximum
contractual period. For these reasons, the risk parameters associated with the measurement of
losses under the IFRS9 accounting standard are often referred to as point-in-time (PIT) parameters.
In particular, regarding the estimation of the PD risk parameter, in line with the requirements of the
IRFS9 standard, namely with the provisions of paragraph [B5.5.43], the probability of default (PD) was
estimated in a 12-month time horizon, but also in a long perspective, capturing the remaining life cycle,
PD Lifetime.
Considering the requirement to measure losses over a maximum time horizon, it becomes necessary
to estimate the PD parameter for different time horizons, greater than or equal to 12 months, thus
obtaining the so-called “PD term structures”, which aim to reflect the PD associated with each
contract, containing a given set of characteristics, for each reference date. The PD lifetime estimated,
refers to the conditional marginal probability used in the ECL calculation, representing the probability of
default of the next cash flow, while the PD structure is the cumulative probability of default, being used
to estimate the PD over a defined time interval, for example, PD term structure 5 years is equivalent to
the probability of default over 5 years. In the review exercise carried out, a time horizon was considered
for estimating the term structure of the DP from January 2015 to December 2019 (5 years). Since 2020
and 2021 are years where the PD would be underestimated due to the granting of moratoria, the values
of PD 2020 and 2021 were estimated according to the application of the forward-looking methodology
- described below - based on the results effectively verified in the relevant macroeconomic variables.
In line with the framework for developing the risk parameter PD scope IFRS9, the primary approach
for obtaining the so-called term structure of PDs, is based on estimated Hazard curves. The hazard
function h (t) also called hazard (failure) rate or mortality force represents the instantaneous death
rate of an individual in the time interval t to t+1, knowing that he or she survived until time t. The use of
this methodology is justified by the need to include, in the estimation process, survival effects as well
as the presence of the maturity effect. This approach was used to estimate the PD parameter for each
client (corporate High Default Portfolio) or for each contract (individual portfolio), as a function of the
underlying rating/score class.
For Low Default Portfolios, typically without statistical significance in the number of observed
defaults that allow the use of statistical methods (such as hazard curves), an alternative approach was
used. This approach consists in extrapolating the PD determined and used for capital purposes (IRB),
assuming a constant marginal probability but applying an adjustment for ratings below or equal to
420
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes “b+”, as a consequence of the difference between the PD Through the Cycle and the observed Default
Rates of the last 5 years, in these ratings versus the others. Additionally, in short term portfolios, with
contractual maturities lower than 12 months, the approach followed in the estimation of the PD risk
parameter, consisted in calculating the observed annual average default rate and extrapolating it in
order to build the PD term structure and the PD lifetime.
Just as important as forecasting Default, is the perception of the loss associated with the contract
given a Default event. The loss given default is defined as the maximum loss incurred on an exposure in
relation to the amount at risk on the date of default.
These models are based, on the one hand, on the historical default series and, on the other hand, on the
historical series of the main macroeconomic variables (GDP, inflation, interest rate, unemployment rate
and house prices). Historical quarterly data since 2010 were used.
With regard to the projection models for PD and LGD in the housing segment, the first step consisted of
a multivariate analysis of the explanatory variables, for which the following variables were used: GDP,
unemployment rate, inflation rate, residential real estate price growth and inflation rate. On the other
hand, the historical default series were transformed through the logit function in order to ensure that
the projections present values between 0 and 1, even in extremely adverse scenarios.
The magnitude of the loss will depend on the moment of Default, thus segregating the following types
of parameters:
Next, linear regression modeling was performed considering 3 explanatory variables, with the objective
of determining the regression that best explains the evolution of the risk parameter.
1. LGD non-Default – estimated loss parameter applicable to contracts that are not yet in Default;
1. 2. LGD in-Default or Expected Recovery Rate - parameter of estimated loss applicable to contracts
that are in Default and which depends on the best estimate for the expected loss;
To determining the LGD parameter (non-default and TRE), a specific framework was developed and
approved consisting of the following methodological steps:
• Determination of the RDS (Reference data Set): in this step, the contracts/clients, with entry into
default status in line with the new definition (nDoD- historical recovery) from January 2010 to July
2019 were selected.
• Determining the realized (or observed) LGD: for each class and each of the defined completion
The choice of the final model depends on the economic sense and its statistical performance. To
determine the statistical performance of the models, the following indicators were taken into account:
• R2: which indicates that part of the evolution of the risk parameter is explained by the explanatory
variables, that is, the explanatory power of the model;
• P- value of the explanatory variables: which indicates whether the explanatory variable in question
is significant in explaining the evolution of the risk parameter;
• Variance inflation factors (VIF): which analyzes whether the explanatory variables are correlated.
If the variable has a value greater than 10 it is considered to have a high correlation with the other
variables, i.e., only models with VIFs less than 10 are considered;
states, determine the associated loss amount.
• Normality of the residuals, which checks whether the model’s residuals are normally distributed,
• Determination of the estimated LGD: for clients/contracts with open positions (incomplete cases),
estimate up to the defined workout the amount still recoverable (based on loss/recovery history).
For corporate portfolios, the estimation of incomplete cases was done using the chain-ladder
method (client view), while for individual portfolios the probabilities/severities method was used
(contract view).
using the Q-Q plot and Shapiro-Wilk tests;
• Homoscedasticity: which seeks to demonstrate that the variance of the errors is constant, since it
is one of the assumptions of the modeling through linear regression, based on a regression of the
risk parameter with its residues, ensuring that this same regression has a p-value greater than 5%;
• Self-correlation of errors: using the Durbin-Watson test, it is ensured that the result is between 1.5
• Determination of the ERR: based on the estimated curve (0->workout) determine the expected
and 2.5.
marginal recovery at each point in time.
•
In order to update the LGD and TRE parameters, the following input parameters were also updated:
o Haircut relative to collateral; o Update rate for each portfolio; o Cost model, including direct and
indirect costs; o Update of the workout period and its adaptation to the current and future strategy
of the collections process, for each estimation segment.
The incorporation of forward-looking information was done through macroeconomic models, which
estimate the evolution of risk parameters through the evolution of macroeconomic variables. Four
PD models were developed: Large and Medium-Sized Enterprises, Small Enterprises and Start-ups,
Home Loans and Other Consumer Credit, and three LGD models: Home Loans, Consumer Credit and
Corporate Credit.
In order to correct problems of autocorrelation of errors, the ARIMA (autoregressive integrated moving
average model) model was used and the performance of the final model was again tested, through the
Durbin-Watson test, after auto-correlation correction.
With regard to the LGD Individual Credit projection model, although the aforementioned methodology
was followed, the results obtained proved to be counterintuitive, namely in terms of the economic
interpretation of the variables versus the statistical results. For this reason, all the models developed
were rejected, and a future change similar to that projected for the CH segment was assumed for this
segment (based on the model developed, whose results, in addition to being statistically significant, are
also interpretable from an economic point of view), considering the correlation between these segments
of households. As regards the forward-looking models within the scope of Corporate LGD, since the
projection model was considered to be adequate both in the variables used and, in its interpretation,
only the macroeconomic series were updated and the projection was updated accordingly.
421
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes 39.3.3.3 - Collective analysis adjustments to the model’s automatic result
Segmentation criteria
Model type
Description
After processing the impairment calculation and validating the consistency of the results obtained,
all situations that may need an adjustment to the calculated impairment value are assessed. These
adjustments are reflected, whenever possible, directly in the exposures.
Expert
Judgement
When this is not possible, the calculated impairment value is recorded without being allocated
to specific exposures and, for that purpose, the stage and the type of credit to which it refers are
associated. Having the prerogative to ensure that all impairment is allocated to specific exposures,
these impairment amounts initially constituted in the unallocated form will, once conditions exist, be
fully distributed over the exposures in which their allocation is determined.
In terms of the governance model, both adjustments to specific exposures and impairment amounts
constituted in the unallocated form must be validated and supported by an approval by a competent
body, which, as a rule, will be the Extended Impairment Committee.
With the exception of the adjustments already described which were made on the universe that
benefited from the moratorium in 2021, and whose impact we estimated in an impairment increase
of €16 million, the remaining adjustments that are made result mainly from the need for data review /
correction.
Therefore, most of the adjustments made in 2021 reflect the application of the collective impairment
calculation rules but with corrected input data.
Sector, Size, Product
Large enterprises
Financial institutions
Municipalities
Institucional
Local and regional
administrations
Real estate (Investment/
Promotion)
Acquisition Finance
Project Finance
Object Finance
Commodity Finance
Template
Ratings atributed by
teams of analyst, using
specific models by
sector (templates) and
financial and qualitative
information.
Medium enterprises
Semi-automatic
39.3.4 - Credit Risk Monitoring
39.3.4.1 - Internal rating models for Corporates, Institutions and shares
Small enterprises
Regarding the rating models for corporate portfolios, different approaches are adopted depending on
the size and sector of activity of the clients. Specific models are also used, adapted to loan operations
of project finance, acquisition finance, object finance, commodity finance and real estate development
finance.
Start-Up’s and individual
entrepreneurs
Statistical
Automatic
Below is a summary table on the types of risk models adopted in the internal assignment of credit
ratings:
Rating model based in
financial, qualitative and
behavioral information,
validated by analysis.
Rating model based in
financial, qualitative and
behavioral information.
Rating model based in
qualitative and behavioral
information.
The Bank’s Rating Department has a Rating Model for the following segments: Start-ups; Individual
Entrepreneurs (ENIs); Small business; Medium-sized companies; Big companies; Real Estate and
Real Estate Income; Holding Large Company; Financial Institution; Municipalities and Institutional;
Sovereign; Project Finance; Object, Commodity and Acquisition Finance; Financial Holding.
The segments for which rating models are not available are:
•
Insurance and Pension Funds;
• Churches, political parties and non-profit associations with a turnover of less than Euro 500
thousand.
422
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Regarding the credit portfolios of Large Companies, Financial Institutions, Institutional, Local
and Regional Administrations and Specialized Loans - namely Project Finance, Object Finance,
Commodity Finance and Acquisition Finance - the credit ratings are assigned by the novobanco Rating
representation. This structure is made up of 7 multisectoral teams that comprise a team leader and
several specialized technical analysts. The attribution of internal risk ratings by this team to these risk
segments, classified as low default portfolios, is based on the use of “expert-based” rating models
(templates) that are based on qualitative and quantitative variables, strongly correlated with the
sector or sectors of activity in which the clients under analysis operate. With the exception of assigning
a rating to specialized loans, the methodology used by the Rating representation is also governed by a
risk analysis at the level of the maximum consolidation perimeter and by the identification of the status
of each company in the respective economic group. The internal credit ratings are validated daily in a
Rating Committee composed of members of the Rating Department’s Management and the various
specialized teams.
For the medium-sized corporate segment, statistical rating models are used, which combine financial
data with qualitative and behavioral information. However, the publication of credit ratings requires
the execution of a previous validation process that is carried out by a technical team of risk analysts,
who also take into account behavioral variables. In addition to rating, these teams also monitor the
customers’ loan portfolio of the novobanco through the preparation of risk analysis reports, as provided
for in internal regulations, in accordance with the current responsibilities / customer rating binomial,
which may include specific recommendations on the credit relationship with a given customer, as well
as technical advice on investment support operations, restructuring, or other operations subject to
credit risk.
models that combine the use of quantitative and technical variables (real estate appraisals carried out
by specialized offices), as well as qualitative and behavioral variables.
With regard to exposures equated to shares held by novobanco, directly or indirectly through the
holding of investment funds, as well as shareholders loans and supplementary capital contributions,
all included in the risk class of shares for the purposes of calculating credit risk weighted assets, they
are classified in the various risk segments according to the characteristics of their issuers or borrowers,
following the segmentation criteria presented above. These segmentation criteria determine the type
of rating model to be applied to the issuers of the shares (or borrowers of the shareholders loans /
supplementary capital contributions) and, therefore, to them.
39.3.4.2 - Relationships between internal and external ratings
The assignment of an internal rating to entities with an external rating is made through the Markets
Template available in the Rating Calculation application. The Markets Template gathers the external
ratings that were assigned to a specific entity by the rating agencies Standard & Poor’s (S&P), Moody’s
and Fitch.
Specifically, the functionality of providing external ratings from S&P - XpressFeed feeds the application
of External Ratings on a daily basis, which allows the external ratings published by these agencies for a
given entity to be filled in the Markets Template. The external ratings assigned by Moody’s and Fitch are
not obtained automatically, having to be entered manually in the Markets Template, after consulting
the respective websites.
For the business segment, statistical scoring models are also used which have, in addition to financial
and qualitative information, the behavioral variables of the companies and the partner(s) in the
calculation of credit ratings.
The internal rating results, in the majority of situations, from the S&P equivalent external rating and,
in exceptional situations, from the S&P equivalent external rating plus an internal adjustment, which
must always be accompanied by justifying comments prepared by the analyst.
There are also implemented scoring models specifically aimed at quantifying the risk of start-ups
(companies established less than 2 years ago) and individual entrepreneurs (ENI). These customers
together with the small companies, depending on the exposure value, are included in the regulatory
retail portfolios.
Finally, for companies in the real estate sector (companies dedicated to the activity of real estate
promotion and investment, especially small and medium-sized companies), taking into account their
specificities, the respective ratings are assigned by a specialized central team, based on use of specific
It should be noted that the S&P equivalent external rating is obtained by making a correspondence
between the available external ratings and the rating scale of the referred financial rating agencies.
The internal ratings produced by the Markets Template and which have had adjustments must be
mandatorily approved and validated by the Rating Committee.
The table below shows the correspondence between the external ratings S&P, Moody’s and Fitch and
the equivalent external rating S&P:
423
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes The table below shows the correspondence between the external ratings S&P, Moody's and Fitch and the equivalent external rating
S&P:
S&P
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
BB
BB-
B+
B
B-
CCC+
CCC
CCC-
CC
SD
D
Moody's
Aaa
Aa1
Aa2
Aa3
A1
A2
A3
Baa1
Baa2
Baa3
Ba1
Ba2
Ba3
B1
B2
B3
Caa1
Caa2
Caa3
Ca
C
Rating externo
equivalente S&P
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
BB
BB-
B+
B
B-
CCC+
CCC
Lower than CCC
Fitch
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
BB
BB-
B+
B
B-
CCC+
CCC
CCC-
CC
C
RD/D
39.3.4.3 - Internal scoring models for Individual portfolios
39.3.4.3 - Internal scoring models for Individual portfolios
With regard to scoring models for individual portfolios, novobanco has origination / concession and behavioral scoring models
(applied to operations older than 6 months).
With regard to scoring models for individual portfolios, novobanco has origination / concession and
behavioral scoring models (applied to operations older than 6 months).
The Bank is authorized by Bank of Portugal to use internal models in the calculation of regulatory
capital requirements for the main portfolios of individuals: Mortgage Loans and Individual Loans. In
addition, it has origination and behavioral scorings for the Credit Card, Overdraft and Loan Accounts
products, which it uses for the purposes of designing and monitoring credit quality, however, not being
IRB portfolios.
These models are automatic, based on statistical models developed with internal information, considering socio-demographic
information, loan characteristics, behavioral information and automatic penalties (if there are warning signs). In the case of behavioral
models, information on the remaining loans of the contract holders is also considered.
These models are automatic, based on statistical models developed with internal information,
considering socio-demographic information, loan characteristics, behavioral information and automatic
penalties (if there are warning signs). In the case of behavioral models, information on the remaining
loans of the contract holders is also considered.
The Bank is authorized by Bank of Portugal to use internal models in the calculation of regulatory capital requirements for the main
portfolios of individuals: Mortgage Loans and Individual Loans. In addition, it has origination and behavioral scorings for the Credit
Card, Overdraft and Loan Accounts products, which it uses for the purposes of designing and monitoring credit quality, however, not
being IRB portfolios.
The table below displays the assets impaired, or overdue but not impaired:
39.3.5 - Delinquency
39.3.5 – Delinquency
The table below displays the assets impaired, or overdue but not impaired:
424
Neither overdue
Overdue but not
nor impaired
impaired
Impaired
Total exposure
Impairment
Net exposure
31.12.2021
(in thousands of Euros)
Deposits with and loans and advances to banks
Securities held for trading
Bonds issued by government and other public entities
Securities at fair value through profit/loss - mandatory
Bonds issued by other entities
Securities at fair value through other comprehensive income
Bonds issued by government and other public entities
Bonds issued by other entities
Securities at amortised cost
Bonds issued by other entities
Loans and advances to customers
Bonds issued by government and other public entities
452 884
114 465
114 465
559 227
559 227
7 061 196
5 685 067
1 376 129
2 826 278
371 273
2 455 005
21 448 271
-
-
-
-
-
-
-
-
-
-
-
8 422
-
-
-
-
-
-
-
22 770
22 770
312 187
312 187
1 708 369
452 884
114 465
114 465
559 227
559 227
7 083 966
5 685 067
1 398 899
3 138 465
371 273
2 767 192
23 165 062
( 1 183)
-
-
-
-
( 3 668)
( 2 995)
( 673)
( 247 772)
( 540)
( 247 232)
(1 235 757)
451 701
114 465
114 465
559 227
559 227
7 080 298
5 682 072
1 398 226
2 890 693
370 733
2 519 960
21 929 305
103
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The table below shows the correspondence between the external ratings S&P, Moody's and Fitch and the equivalent external rating
S&P:
Moody's
Rating externo
equivalente S&P
S&P
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
BB
BB-
B+
B
B-
CCC+
CCC
CCC-
CC
SD
D
Aaa
Aa1
Aa2
Aa3
A1
A2
A3
Baa1
Baa2
Baa3
Ba1
Ba2
Ba3
B1
B2
B3
Caa1
Caa2
Caa3
Ca
C
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
BB
BB-
B+
B
B-
CCC+
CCC
Lower than CCC
Fitch
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
BB
BB-
B+
B
B-
CCC+
CCC
CCC-
CC
C
RD/D
39.3.4.3 - Internal scoring models for Individual portfolios
With regard to scoring models for individual portfolios, novobanco has origination / concession and behavioral scoring models
(applied to operations older than 6 months).
These models are automatic, based on statistical models developed with internal information, considering socio-demographic
information, loan characteristics, behavioral information and automatic penalties (if there are warning signs). In the case of behavioral
models, information on the remaining loans of the contract holders is also considered.
The Bank is authorized by Bank of Portugal to use internal models in the calculation of regulatory capital requirements for the main
portfolios of individuals: Mortgage Loans and Individual Loans. In addition, it has origination and behavioral scorings for the Credit
Card, Overdraft and Loan Accounts products, which it uses for the purposes of designing and monitoring credit quality, however, not
being IRB portfolios.
39.3.5 – Delinquency
The table below displays the assets impaired, or overdue but not impaired:
Neither overdue
nor impaired
Overdue but not
impaired
Impaired
Total exposure
Impairment
Net exposure
31.12.2021
(in thousands of Euros)
Deposits with and loans and advances to banks
Securities held for trading
Bonds issued by government and other public entities
Securities at fair value through profit/loss - mandatory
Bonds issued by other entities
Securities at fair value through other comprehensive income
Bonds issued by government and other public entities
Bonds issued by other entities
Securities at amortised cost
Bonds issued by government and other public entities
Bonds issued by other entities
Loans and advances to customers
452 884
114 465
114 465
559 227
559 227
7 061 196
5 685 067
1 376 129
2 826 278
371 273
2 455 005
21 448 271
-
-
-
-
-
-
-
-
-
-
-
8 422
-
-
-
-
-
22 770
-
22 770
312 187
-
312 187
1 708 369
452 884
114 465
114 465
559 227
559 227
7 083 966
5 685 067
1 398 899
3 138 465
371 273
2 767 192
23 165 062
( 1 183)
-
-
-
-
( 3 668)
( 2 995)
( 673)
( 247 772)
( 540)
( 247 232)
(1 235 757)
451 701
114 465
114 465
559 227
559 227
7 080 298
5 682 072
1 398 226
2 890 693
370 733
2 519 960
21 929 305
Neither overdue
nor impaired
Overdue but not
impaired
Impaired
Total exposure
Impairment
Net exposure
103
31.12.2020
(in thousands of Euros)
Deposits with and loans and advances to banks
Securities held for trading
Bonds issued by government and other public entities
Securities at fair value through profit/loss - mandatory
Bonds issued by other entities
Securities at fair value through other comprehensive income
Bonds issued by government and other public entities
Bonds issued by other entities
Securities at amortised cost
Bonds issued by government and other public entities
Bonds issued by other entities
Loans and advances to customers
271 233
267 016
267 016
647 082
647 082
7 736 454
6 406 465
1 329 989
2 957 737
415 192
2 542 545
21 195 090
-
-
-
-
-
-
-
-
-
-
-
6 366
314 138
-
-
-
-
22 770
-
22 770
119 605
-
119 605
2 130 652
585 371
267 016
267 016
647 082
647 082
7 759 224
6 406 465
1 352 759
3 077 342
415 192
2 662 150
23 332 108
( 250 153)
-
-
-
-
( 3 660)
( 3 095)
( 565)
( 202 460)
( 576)
( 201 884)
(1 587 003)
335 218
267 016
267 016
647 082
647 082
7 755 564
6 403 370
1 352 194
2 874 882
414 616
2 460 266
21 745 105
Impaired exposures correspond to (i) exposures with objective evidence of loss (“Exposure in default”, according to the internal
definition of default - which corresponds to Stage 3); and (ii) exposures classified as having specific impairment after individual
impairment assessment.
Impaired exposures correspond to (i) exposures with objective evidence of loss (“Exposure in default”,
according to the internal definition of default - which corresponds to Stage 3); and (ii) exposures
classified as having specific impairment after individual impairment assessment.
The exposures classified as not having impairment relate to (i) all exposures that do not show signs of significant deterioration in
credit risk - exposures classified in Stage 1; (ii) exposures that, showing signs of significant deterioration in credit risk, have no
objective evidence of loss or specific impairment after an individual assessment of impairment.
The exposures classified as not having impairment relate to (i) all exposures that do not show signs of
significant deterioration in credit risk - exposures classified in Stage 1; (ii) exposures that, showing signs
of significant deterioration in credit risk, have no objective evidence of loss or specific impairment after
an individual assessment of impairment.
The following table presents the assets that are impaired or overdue but not impaired, split by their respective maturity or ageing (when
overdue):
The following table presents the assets that are impaired or overdue but not impaired, split by their
respective maturity or ageing (when overdue):
Securities Portfolio - debt
instruments
31.12.2021
Deposits with and loans and
advances to banks
(in thousands of Euros)
Loans and advances to customers
Overdue but not
impaired
Impaired
Overdue but not
impaired
Impaired
Overdue but not
impaired
Impaired
Overdue
Up to 3 months
From 3 months to 1 year
From 1 to 3 years
From 3 to 5 years
More than 5 years
Due
Up to 3 months
From 3 months to 1 year
From 1 to 3 years
From 3 to 5 years
More than 5 years
-
-
-
-
-
-
-
-
-
-
-
-
-
-
210 598
1 940
37 594
84 825
334 957
-
-
-
-
-
-
334 957
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6 879
1 095
385
36
27
8 422
-
-
-
-
-
-
8 422
16 132
17 628
45 925
70 988
142 392
293 065
95 219
201 267
246 010
137 820
734 988
1 415 304
1 708 369
425
104
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Neither overdue
Overdue but not
nor impaired
impaired
Impaired
Total exposure
Impairment
Net exposure
31.12.2020
(in thousands of Euros)
Deposits with and loans and advances to banks
Securities held for trading
Bonds issued by government and other public entities
Securities at fair value through profit/loss - mandatory
Bonds issued by other entities
Securities at fair value through other comprehensive income
Bonds issued by government and other public entities
Bonds issued by other entities
Securities at amortised cost
Bonds issued by other entities
Loans and advances to customers
Bonds issued by government and other public entities
271 233
267 016
267 016
647 082
647 082
7 736 454
6 406 465
1 329 989
2 957 737
415 192
2 542 545
21 195 090
-
-
-
-
-
-
-
-
-
-
-
6 366
314 138
( 250 153)
-
-
-
-
-
-
22 770
22 770
119 605
119 605
2 130 652
585 371
267 016
267 016
647 082
647 082
7 759 224
6 406 465
1 352 759
3 077 342
415 192
2 662 150
23 332 108
-
-
-
-
( 3 660)
( 3 095)
( 565)
( 202 460)
( 576)
( 201 884)
(1 587 003)
335 218
267 016
267 016
647 082
647 082
7 755 564
6 403 370
1 352 194
2 874 882
414 616
2 460 266
21 745 105
Impaired exposures correspond to (i) exposures with objective evidence of loss (“Exposure in default”, according to the internal
definition of default - which corresponds to Stage 3); and (ii) exposures classified as having specific impairment after individual
impairment assessment.
The exposures classified as not having impairment relate to (i) all exposures that do not show signs of significant deterioration in
credit risk - exposures classified in Stage 1; (ii) exposures that, showing signs of significant deterioration in credit risk, have no
objective evidence of loss or specific impairment after an individual assessment of impairment.
The following table presents the assets that are impaired or overdue but not impaired, split by their respective maturity or ageing (when
overdue):
Overdue
Up to 3 months
From 3 months to 1 year
From 1 to 3 years
From 3 to 5 years
More than 5 years
Due
Up to 3 months
From 3 months to 1 year
From 1 to 3 years
From 3 to 5 years
More than 5 years
Overdue
Up to 3 months
From 3 months to 1 year
From 1 to 3 years
From 3 to 5 years
More than 5 years
Due
Up to 3 months
From 3 months to 1 year
From 1 to 3 years
From 3 to 5 years
More than 5 years
Securities Portfolio - debt
instruments
31.12.2021
Deposits with and loans and
advances to banks
(in thousands of Euros)
Loans and advances to customers
Overdue but not
impaired
Impaired
Overdue but not
impaired
Impaired
Overdue but not
impaired
Impaired
-
-
-
-
-
-
-
-
-
-
-
-
-
-
210 598
1 940
37 594
84 825
334 957
-
-
-
-
-
-
334 957
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6 879
1 095
385
36
27
8 422
-
-
-
-
-
-
8 422
16 132
17 628
45 925
70 988
142 392
293 065
95 219
201 267
246 010
137 820
734 988
1 415 304
1 708 369
Securities Portfolio - debt
instruments
31.12.2020
Deposits with and loans and
advances to banks
(in thousands of Euros)
Loans and advances to customers
Overdue but not
impaired
Impaired
Overdue but not
impaired
Impaired
Overdue but not
impaired
Impaired
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15 126
10 330
34 444
82 475
142 375
-
-
-
-
-
-
142 375
-
-
-
-
-
-
-
-
-
-
-
-
-
34 726
-
-
-
-
34 726
-
-
-
-
279 412
279 412
314 138
5 148
912
153
23
130
6 366
-
-
-
-
-
-
15 179
56 905
91 301
231 222
215 280
609 887
37 231
312 428
266 246
146 644
104
758 216
1 520 765
6 366
2 130 652
The following table shows the assets that are impaired or overdue but not impaired, broken down by the respective impairment stage:
Deposits with and loans and advances to banks
Securities at fair value through other comprehensive income
Securities at amortised cost
Loans and advances to customers
Credit risk by rating grade
31.12.2021
31.12.2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
-
-
-
4 874
4 874
-
-
-
3 548
-
22 770
312 187
1 708 369
-
22 770
312 187
1 716 791
-
-
-
1 671
314 138
-
-
4 691
-
22 770
119 605
2 130 656
314 138
22 770
119 605
2 137 018
3 548
2 043 326
2 051 748
1 671
318 829
2 273 031
2 593 531
(in thousands of Euros)
Regarding assets that are neither past due nor impaired, the distribution by rating grade is presented below. For the debt instruments,
the rating assigned by the Rating Agencies is taken into account, for the credit to clients and cash and deposits with credit institutions,
the internal rating and scoring models are used, that assign a risk rating, which is periodically reviewed. For the purposes of presenting
the information, the ratings have been aggregated into five major risk groups, with the last group including the unrated exposures.
Prime +High
Upper Medium
Lower Medium
grade
Grade
grade
Speculative +
Others
Total
(in thousand of Euros)
31.12.2021
Non Investment
Grade
Highly
speculative
Deposits with and loans and advances to banks
625
26 580
57 521
78 598
Securities held for trading
Bonds issued by government and other public entities
Securities at fair value through profit/loss - mandatory
Bonds issued by other entities
Securities at fair value through other comprehensive income
Bonds issued by government and other public entities
Bonds issued by other entities
Securities at amortised cost
Bonds issued by other entities
Loans and advances to customers
Bonds issued by government and other public entities
-
-
-
-
1 449 335
988 890
460 445
10 631
-
10 631
3 130 230
-
-
-
-
1 982 997
1 934 969
48 028
157 161
-
157 161
7 773 753
-
-
-
-
3 478 155
2 713 682
764 473
417 707
-
417 707
2 460 371
-
-
-
-
-
-
1 788
1 788
258 867
258 867
6 865 797
289 560
114 465
114 465
559 227
559 227
148 921
47 526
101 395
1 981 912
371 273
1 610 639
1 218 120
452 884
114 465
114 465
559 227
559 227
7 061 196
5 685 067
1 376 129
2 826 278
371 273
2 455 005
21 448 271
105
426
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
31.12.2020
(in thousands of Euros)
Securities Portfolio - debt
Deposits with and loans and
instruments
advances to banks
Loans and advances to customers
Overdue but not
impaired
Impaired
Overdue but not
impaired
Impaired
Overdue but not
impaired
Impaired
(in thousands of Euros)
Overdue but not
impaired
Securities Portfolio - debt
instruments
-
-
-
-
-
-
-
-
15 126
10 330
Impaired
34 444
82 475
142 375
-
31.12.2020
Deposits with and loans and
34 726
advances to banks
Overdue but not
impaired
Impaired
Overdue but not
153
impaired
-
-
-
-
34 726
34 726
Loans and advances to customers
5 148
912
23
130
6 366
5 148
15 179
56 905
91 301
Impaired
231 222
215 280
609 887
15 179
-
-
-
-
-
-
-
Overdue
Up to 3 months
From 3 months to 1 year
From 1 to 3 years
From 3 to 5 years
More than 5 years
Overdue
Up to 3 months
Due
From 3 months to 1 year
Up to 3 months
From 1 to 3 years
From 3 months to 1 year
From 3 to 5 years
From 1 to 3 years
More than 5 years
From 3 to 5 years
More than 5 years
15 126
-
10 330
-
34 444
-
82 475
-
142 375
-
-
-
142 375
-
-
The following table shows the assets that are impaired or overdue but not impaired, broken down by
-
the respective impairment stage:
-
-
Up to 3 months
From 3 months to 1 year
From 1 to 3 years
From 3 to 5 years
More than 5 years
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Due
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
34 726
279 412
279 412
-
314 138
-
-
-
279 412
279 412
The following table shows the assets that are impaired or overdue but not impaired, broken down by the respective impairment stage:
-
142 375
31.12.2021
-
Stage 1
Stage 2
Stage 3
Total
314 138
Stage 1
31.12.2020
6 366
Stage 2
Stage 3
2 130 652
Total
The following table shows the assets that are impaired or overdue but not impaired, broken down by the respective impairment stage:
-
Deposits with and loans and advances to banks
-
Securities at fair value through other comprehensive income
-
Securities at amortised cost
3 548
Loans and advances to customers
314 138
-
-
4 691
-
-
-
1 671
-
-
-
4 874
31.12.2020
31.12.2021
Credit risk by rating grade
Stage 1
Stage 2
3 548
-
Deposits with and loans and advances to banks
-
Securities at fair value through other comprehensive income
Credit risk by rating grade
-
Securities at amortised cost
3 548
Regarding assets that are neither past due nor impaired, the distribution by rating grade is presented below. For the debt instruments,
Loans and advances to customers
the rating assigned by the Rating Agencies is taken into account, for the credit to clients and cash and deposits with credit institutions,
the internal rating and scoring models are used, that assign a risk rating, which is periodically reviewed. For the purposes of presenting
the information, the ratings have been aggregated into five major risk groups, with the last group including the unrated exposures.
Credit risk by rating grade
1 671
-
-
-
1 671
4 874
-
-
-
4 874
2 593 531
2 043 326
2 051 748
2 273 031
318 829
1 671
3 548
4 874
Stage 2
318 829
314 138
-
-
4 691
Stage 1
Regarding assets that are neither past due nor impaired, the distribution by rating grade is presented
below. For the debt instruments, the rating assigned by the Rating Agencies is taken into account,
for the credit to clients and cash and deposits with credit institutions, the internal rating and scoring
models are used, that assign a risk rating, which is periodically reviewed. For the purposes of presenting
the information, the ratings have been aggregated into five major risk groups, with the last group
including the unrated exposures.
(in thousand of Euros)
Regarding assets that are neither past due nor impaired, the distribution by rating grade is presented below. For the debt instruments,
the rating assigned by the Rating Agencies is taken into account, for the credit to clients and cash and deposits with credit institutions,
the internal rating and scoring models are used, that assign a risk rating, which is periodically reviewed. For the purposes of presenting
the information, the ratings have been aggregated into five major risk groups, with the last group including the unrated exposures.
31.12.2021
Others
Total
Prime +High
grade
Upper Medium
Grade
Lower Medium
grade
-
22 770
312 187
1 708 369
Stage 3
2 043 326
-
22 770
312 187
1 708 369
-
22 770
312 187
1 716 791
Total
2 051 748
-
22 770
312 187
1 716 791
912
-
153
-
23
-
130
-
6 366
-
-
-
6 366
-
-
-
-
-
56 905
37 231
91 301
312 428
231 222
266 246
215 280
146 644
609 887
758 216
1 520 765
37 231
2 130 652
312 428
266 246
146 644
758 216
1 520 765
(in thousands of Euros)
-
22 770
119 605
2 130 656
Stage 3
2 273 031
-
22 770
119 605
2 130 656
314 138
22 770
119 605
(in thousands of Euros)
2 137 018
Total
2 593 531
314 138
22 770
119 605
2 137 018
31.12.2021
Deposits with and loans and advances to banks
Securities held for trading
Bonds issued by government and other public entities
Securities at fair value through profit/loss - mandatory
Bonds issued by other entities
Securities at fair value through other comprehensive income
Deposits with and loans and advances to banks
Securities held for trading
Bonds issued by government and other public entities
Bonds issued by other entities
Bonds issued by government and other public entities
Securities at amortised cost
Securities at fair value through profit/loss - mandatory
Bonds issued by government and other public entities
Bonds issued by other entities
Bonds issued by other entities
Securities at fair value through other comprehensive income
Loans and advances to customers
Bonds issued by government and other public entities
Bonds issued by other entities
Securities at amortised cost
Bonds issued by government and other public entities
Bonds issued by other entities
Loans and advances to customers
625
-
-
Prime +High
-
grade
-
1 449 335
625
988 890
-
460 445
-
10 631
-
-
-
10 631
1 449 335
3 130 230
988 890
460 445
10 631
-
10 631
3 130 230
26 580
-
-
Upper Medium
-
Grade
-
1 982 997
26 580
1 934 969
-
48 028
-
157 161
-
-
-
157 161
1 982 997
7 773 753
1 934 969
48 028
157 161
-
157 161
7 773 753
57 521
-
-
Lower Medium
-
grade
-
3 478 155
57 521
2 713 682
-
764 473
-
417 707
-
-
-
417 707
3 478 155
2 460 371
2 713 682
764 473
417 707
-
417 707
2 460 371
Non Investment
Grade
Speculative +
Highly
speculative
78 598
Non Investment
-
Grade
-
Speculative +
-
Highly
-
speculative
1 788
78 598
-
-
1 788
-
258 867
-
-
-
258 867
1 788
6 865 797
-
1 788
258 867
-
258 867
6 865 797
(in thousand of Euros)
Others
289 560
114 465
114 465
559 227
559 227
148 921
289 560
47 526
114 465
101 395
114 465
1 981 912
559 227
371 273
559 227
1 610 639
148 921
1 218 120
47 526
101 395
1 981 912
371 273
1 610 639
1 218 120
Total
452 884
114 465
114 465
559 227
559 227
7 061 196
452 884
5 685 067
114 465
1 376 129
114 465
2 826 278
559 227
371 273
559 227
2 455 005
7 061 196
21 448 271
5 685 067
1 376 129
2 826 278
371 273
2 455 005
21 448 271
427
105
105
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Prime +High
grade
Upper Medium
Grade
Lower Medium
grade
31.12.2020
Prime +High
grade
Upper Medium
Grade
Lower Medium
grade
Deposits with and loans and advances to banks
Securities held for trading
Bonds issued by government and other public entities
Deposits with and loans and advances to banks
Securities at fair value through profit/loss - mandatory
Securities held for trading
Bonds issued by other entities
Bonds issued by government and other public entities
Securities at fair value through other comprehensive income
Securities at fair value through profit/loss - mandatory
Bonds issued by government and other public entities
Bonds issued by other entities
Bonds issued by other entities
Securities at fair value through other comprehensive income
Securities at amortised cost
Bonds issued by government and other public entities
Bonds issued by government and other public entities
Bonds issued by other entities
Bonds issued by other entities
Securities at amortised cost
Loans and advances to customers
Bonds issued by government and other public entities
Bonds issued by other entities
1 096
-
-
1 096
-
-
-
-
1 415 572
-
966 035
-
449 537
1 415 572
-
966 035
-
449 537
-
-
3 312 685
-
-
3 312 685
22 063
-
-
22 063
32 670
-
32 670
-
2 335 007
32 670
2 322 904
32 670
12 103
2 335 007
51 608
2 322 904
-
12 103
51 608
51 608
7 689 385
-
51 608
7 689 385
31.12.2020
Non Investment
Grade
Speculative +
Non Investment
Highly
Grade
speculative
Speculative +
29 657
Highly
-
speculative
-
29 657
-
-
-
-
-
-
-
-
-
-
37 958
-
-
-
37 958
37 958
6 757 902
-
37 958
6 757 902
9 434
267 016
267 016
9 434
-
267 016
-
267 016
3 247 135
-
2 863 559
-
383 576
3 247 135
140 510
2 863 559
-
383 576
140 510
140 510
2 375 213
-
140 510
2 375 213
(in thousands of Euros)
(in thousands of Euros)
Others
Total
Others
208 983
-
-
208 983
614 412
-
614 412
-
738 740
614 412
253 967
614 412
484 773
738 740
2 727 661
253 967
415 192
484 773
2 312 469
2 727 661
1 059 906
415 192
2 312 469
1 059 906
Total
271 233
267 016
267 016
271 233
647 082
267 016
647 082
267 016
7 736 454
647 082
6 406 465
647 082
1 329 989
7 736 454
2 957 737
6 406 465
415 192
1 329 989
2 542 545
2 957 737
21 195 090
415 192
2 542 545
21 195 090
Loans and advances to customers
As at 31 December 2021 and 2020, the breakdown of gross credit exposure and impairment by segment was as follows:
As at 31 December 2021 and 2020, the breakdown of gross credit exposure and impairment by segment
was as follows:
Perfoming
As at 31 December 2021 and 2020, the breakdown of gross credit exposure and impairment by segment was as follows:
31.12.2021
Segment
Performing or with a delay
< 30 days
Segment
Corporate
Mortgage loans
Consumer and other loans
Exposure
Impairment
Performing or with a delay
312 746
< 30 days
12 041 900
8 166 486
Exposure
1 070 498
19 899
Impairment
23 262
With a delay > 30 days
Total
Exposure
Perfoming
Impairment
Exposure
Impairment
Exposure
Impairment
With a delay > 30 days
137 406
17 497
12 179 306
Total
330 243
28 662
Exposure
8 499
1 139
Impairment
1 539
8 195 148
Exposure
1 078 997
21 038
Impairment
24 801
Days of delay
876 737
367 913
509 684
316 099
1 386 421
Total
684 012
<= 90 days
100 041
Exposure
153 151
16 894
Impairment
136 809
> 90 days
38 657
Exposure
33 341
6 693
Impairment
15 267
138 698
Exposure
186 492
23 587
Impairment
152 076
Non-Perfoming
Days of delay
31.12.2021
<= 90 days
> 90 days
Non-Perfoming
Exposure
Impairment
Total
Exposure
Impairment
(in thousands of Euros)
Total Credit
(in thousands of Euros)
Exposure
Impairment
Total Credit
13 565 727
Exposure
8 333 846
1 014 255
Impairment
44 265
1 265 489
176 877
23 165 062
(in thousands of Euros)
1 235 397
Total Credit
(in thousands of Euros)
Exposure
Impairment
Total Credit
13 723 207
Exposure
8 394 546
1 347 692
Impairment
52 861
1 214 355
186 450
Corporate
Total
Mortgage loans
12 041 900
21 278 884
8 166 486
312 746
355 907
19 899
137 406
174 567
28 662
17 497
20 175
1 139
12 179 306
21 453 451
8 195 148
330 243
376 082
21 038
876 737
1 129 929
100 041
367 913
521 616
16 894
509 684
581 682
38 657
316 099
338 059
6 693
1 386 421
1 711 611
138 698
684 012
859 675
23 587
13 565 727
23 165 062
8 333 846
1 014 255
1 235 397
44 265
Consumer and other loans
1 070 498
23 262
8 499
1 539
1 078 997
24 801
153 151
136 809
33 341
15 267
186 492
152 076
1 265 489
176 877
Total
21 278 884
355 907
174 567
20 175
21 453 451
376 082
1 129 929
521 616
31.12.2020
581 682
338 059
1 711 611
859 675
Perfoming
Non-Perfoming
Segment
Performing or with a delay
< 30 days
With a delay > 30 days
Total
Days of delay
31.12.2020
<= 90 days
Exposure
Perfoming
Impairment
Exposure
Impairment
Exposure
Impairment
> 90 days
Non-Perfoming
Exposure
Impairment
Total
Exposure
Impairment
Segment
Corporate
Mortgage loans
Consumer and other loans
Exposure
Impairment
Performing or with a delay
326 906
< 30 days
11 964 412
8 164 517
Exposure
1 001 602
13 813
Impairment
21 940
With a delay > 30 days
7 196
645
11 971 608
Total
327 551
51 700
Exposure
12 026
1 408
Impairment
2 374
8 216 217
Exposure
1 013 628
15 221
Impairment
24 314
Days of delay
942 985
478 871
808 614
541 270
1 751 599
Total
1 020 141
<= 90 days
89 546
Exposure
147 553
13 967
Impairment
122 358
> 90 days
88 783
Exposure
53 174
23 673
Impairment
39 778
178 329
Exposure
200 727
37 640
Impairment
162 136
Corporate
Total
Mortgage loans
11 964 412
21 130 531
8 164 517
326 906
362 659
13 813
7 196
70 922
51 700
645
4 427
1 408
11 971 608
21 201 453
8 216 217
327 551
367 086
15 221
942 985
1 180 084
89 546
478 871
615 196
13 967
808 614
950 571
88 783
541 270
604 721
23 673
1 751 599
2 130 655
178 329
1 020 141
1 219 917
37 640
13 723 207
23 332 108
8 394 546
Consumer and other loans
As at 31 December 2021 and 2020, the details of the loan portfolio by segment and by reference year were as follows:
Total
21 201 453
21 130 531
1 180 084
2 130 655
1 219 917
1 013 628
1 001 602
950 571
604 721
362 659
367 086
615 196
147 553
122 358
200 727
162 136
70 922
12 026
21 940
24 314
53 174
39 778
4 427
2 374
23 332 108
1 214 355
1 347 692
1 587 003
52 861
186 450
1 587 003
As at 31 December 2021 and 2020, the details of the loan portfolio by segment and by reference year were as follows:
(in thousands of Euros)
31.12.2021
Year of
2004 and prior
production
2005
2004 and prior
2006
Number of
3 886
operations
663
3 886
808
44 858
251 754
168 268
251 754
Amount
20 380
Impairment
1 090 237
Amount
8 193
Impairment
Number of
58 196
operations
4 826
58 196
6 989
179 557
1 090 237
287 520
Number of
operations
Number of
736 275
operations
15 111
736 275
19 993
Amount
Total
Impairment
1 396 077
Amount
28 575
Impairment
230 881
1 396 077
463 287
Number of
674 193
operations
9 622
674 193
12 196
9 622
23 227
12 196
18 427
54 086
Amount
2
Impairment
6 466
54 086
7 499
6 466
9 766
7 499
8 455
269
2
808
269
526
808
304
4 602
20 380
33 528
4 602
47 712
33 528
31 258
47 712
19 262
31 258
32 221
19 262
47 648
32 221
36 521
47 648
86 678
15 111
35 098
230 881
712 560
19 993
29 799
463 287
955 491
4 826
10 832
179 557
433 898
6 989
10 340
287 520
468 928
10 832
8 099
433 898
400 808
10 340
7 720
468 928
424 284
8 099
4 146
400 808
191 270
7 720
2 307
424 284
82 796
4 146
2 686
191 270
127 725
663
1 039
44 858
268 896
808
1 032
168 268
478 108
1 039
822
268 896
192 832
1 032
953
478 108
180 669
822
968
192 832
183 065
953
1 243
180 669
235 250
968
1 587
183 065
419 132
2005
2007
2006
2008
2007
2009
2008
2010
2009
2011
2010
2012
2011
2013
2012
2014
2013
2015
2014
2016
2015
2017
2016
2018
2017
2019
2018
2020
2019
2021
2020
Total
2021
Total
23 227
10 777
9 766
16 420
526
9 222
35 098
19 698
712 560
610 060
18 427
16 591
8 455
21 945
304
555
29 799
25 264
955 491
626 898
10 777
18 055
16 420
13 257
9 222
381
19 698
23 169
610 060
387 592
16 591
24 783
21 945
11 479
555
491
25 264
28 333
626 898
329 525
18 055
22 115
13 257
19 703
381
1 815
23 169
26 388
387 592
566 560
1 243
1 653
235 250
310 977
36 521
113 995
2 307
1 710
82 796
92 430
819
719
24 783
20 551
11 479
13 349
491
424
28 333
23 914
329 525
416 756
37 831
115 138
1 587
2 457
419 132
607 522
86 678
106 205
2 686
2 633
127 725
159 906
1 653
3 564
310 977
638 085
113 995
50 094
1 710
5 459
92 430
365 317
22 115
26 067
19 703
110 583
20 551
41 939
13 349
65 244
1 815
96 719
23 583
424
26 388
31 157
566 560
878 011
89 996
203 727
23 914
50 962
416 756
1 068 646
115 138
75 629
2 457
6 104
607 522
863 002
106 205
55 074
2 633
8 457
159 906
662 614
26 067
47 247
110 583
79 283
96 719
7 392
31 157
100 343
878 011
1 604 899
203 727
66 172
3 564
7 630
638 085
1 492 690
50 094
84 909
5 459
9 644
365 317
882 450
41 939
56 365
65 244
134 694
23 583
6 847
50 962
73 639
1 068 646
2 509 834
75 629
95 350
6 104
9 113
863 002
2 399 569
55 074
147 112
8 457
9 886
662 614
955 084
47 247
62 443
79 283
218 276
7 392
11 720
100 343
81 442
1 604 899
3 572 929
66 172
162 325
7 630
10 891
1 492 690
2 452 419
84 909
59 859
9 644
7 148
882 450
709 118
56 365
40 602
134 694
170 741
6 847
6 963
73 639
58 641
2 509 834
3 332 278
95 350
68 929
9 113
12 497
2 399 569
2 378 631
147 112
37 197
9 886
7 262
955 084
819 904
62 443
58 848
218 276
304 243
11 720
8 856
81 442
78 607
3 572 929
3 502 778
162 325
47 636
10 891
66 910 13 565 727
2 452 419
59 859
1 014 255
7 148
168 340
709 118
8 333 846
2 107
44 625
40 602
1 184 048
170 741
1 265 489
6 963
176 877
1 457 833 23 165 062
3 332 278
58 641
68 929
1 235 757
12 497
2 378 631
37 197
7 262
819 904
1 583
58 848
304 243
8 856
78 607
3 502 778
47 636
66 910 13 565 727
1 014 255
168 340
8 333 846
44 625
1 184 048
1 265 489
176 877
1 457 833 23 165 062
1 516
8 193
1 715
1 516
3 331
1 715
3 221
3 331
2 351
3 221
2 898
2 351
1 121
2 898
819
1 121
1 503
1 503
803
719
1 952
803
3 706
1 952
3 594
3 706
3 493
3 594
2 107
3 493
1 583
Mortgage loans
As at 31 December 2021 and 2020, the details of the loan portfolio by segment and by reference year
were as follows:
Number of
operations
Number of
operations
Year of
production
Amount
Mortgage loans
Amount
Corporate
Impairment
Corporate
31.12.2021
Impairment
Number of
operations
Amount
Consumer and other loans
Impairment
Consumer and other loans
Total
(in thousands of Euros)
428
6 387
28 575
36 051
6 387
51 569
36 051
34 783
51 569
30 835
34 783
35 674
30 835
49 150
35 674
37 831
49 150
89 996
1 235 757
106
106
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
31.12.2020
Non Investment
Grade
Highly
speculative
9 434
267 016
267 016
-
-
3 247 135
2 863 559
383 576
140 510
-
140 510
2 375 213
-
-
-
-
-
-
-
-
37 958
37 958
6 757 902
-
-
614 412
614 412
738 740
253 967
484 773
2 727 661
415 192
2 312 469
1 059 906
(in thousands of Euros)
271 233
267 016
267 016
647 082
647 082
7 736 454
6 406 465
1 329 989
2 957 737
415 192
2 542 545
21 195 090
(in thousands of Euros)
(in thousands of Euros)
Deposits with and loans and advances to banks
1 096
22 063
29 657
208 983
Prime +High
Upper Medium
Lower Medium
grade
Grade
grade
Speculative +
Others
Total
Securities held for trading
Bonds issued by government and other public entities
Securities at fair value through profit/loss - mandatory
Bonds issued by other entities
Securities at fair value through other comprehensive income
Bonds issued by government and other public entities
Bonds issued by other entities
Securities at amortised cost
Bonds issued by other entities
Loans and advances to customers
Bonds issued by government and other public entities
-
-
-
-
-
-
-
1 415 572
966 035
449 537
3 312 685
-
-
32 670
32 670
2 335 007
2 322 904
12 103
51 608
-
51 608
7 689 385
As at 31 December 2021 and 2020, the breakdown of gross credit exposure and impairment by segment was as follows:
Segment
Performing or with a delay
< 30 days
With a delay > 30 days
Total
Days of delay
Total
<= 90 days
> 90 days
Exposure
Impairment
Perfoming
Non-Perfoming
Total Credit
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Corporate
Mortgage loans
Consumer and other loans
12 041 900
312 746
137 406
17 497
12 179 306
330 243
367 913
509 684
316 099
1 386 421
684 012
13 565 727
1 014 255
8 166 486
1 070 498
19 899
23 262
28 662
8 499
1 139
1 539
8 195 148
1 078 997
21 038
24 801
16 894
136 809
38 657
33 341
6 693
15 267
138 698
186 492
23 587
152 076
8 333 846
44 265
1 265 489
176 877
876 737
100 041
153 151
Total
21 278 884
355 907
174 567
20 175
21 453 451
376 082
1 129 929
521 616
581 682
338 059
1 711 611
859 675
23 165 062
1 235 397
31.12.2021
31.12.2020
Segment
Performing or with a delay
< 30 days
With a delay > 30 days
Total
Days of delay
Total
<= 90 days
> 90 days
Exposure
Impairment
Perfoming
Non-Perfoming
Total Credit
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
Corporate
Mortgage loans
Consumer and other loans
11 964 412
326 906
8 164 517
1 001 602
13 813
21 940
7 196
51 700
12 026
645
11 971 608
327 551
942 985
478 871
808 614
541 270
1 751 599
1 020 141
13 723 207
1 347 692
1 408
2 374
8 216 217
1 013 628
15 221
24 314
89 546
13 967
147 553
122 358
88 783
53 174
23 673
39 778
178 329
200 727
37 640
162 136
8 394 546
52 861
1 214 355
186 450
Total
21 130 531
362 659
70 922
4 427
21 201 453
367 086
1 180 084
615 196
950 571
604 721
2 130 655
1 219 917
23 332 108
1 587 003
As at 31 December 2021 and 2020, the details of the loan portfolio by segment and by reference year were as follows:
31.12.2021
(in thousands of Euros)
Corporate
Mortgage loans
Consumer and other loans
Total
Year of
production
Number of
operations
Amount
Impairment
Number of
operations
Amount
Impairment
Number of
operations
Amount
Impairment
Number of
operations
Amount
Impairment
2004 and prior
3 886
251 754
20 380
58 196
1 090 237
8 193
674 193
54 086
2
736 275
1 396 077
28 575
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
663
44 858
4 602
4 826
179 557
1 516
9 622
6 466
808
168 268
33 528
6 989
287 520
1 715
12 196
7 499
1 039
268 896
47 712
10 832
433 898
3 331
23 227
9 766
1 032
478 108
31 258
10 340
468 928
3 221
18 427
8 455
269
808
526
304
15 111
230 881
6 387
19 993
463 287
36 051
35 098
712 560
51 569
29 799
955 491
34 783
822
192 832
19 262
8 099
400 808
2 351
10 777
16 420
9 222
19 698
610 060
30 835
953
180 669
32 221
7 720
424 284
2 898
16 591
21 945
968
183 065
47 648
4 146
191 270
1 121
18 055
13 257
1 243
235 250
36 521
2 307
82 796
819
24 783
11 479
555
381
491
25 264
626 898
35 674
23 169
387 592
49 150
28 333
329 525
37 831
1 587
419 132
86 678
2 686
127 725
1 503
22 115
19 703
1 815
26 388
566 560
89 996
1 653
310 977
113 995
1 710
92 430
2 457
607 522
106 205
2 633
159 906
719
803
20 551
13 349
424
23 914
416 756
115 138
26 067
110 583
96 719
31 157
878 011
203 727
3 564
638 085
50 094
5 459
365 317
1 952
41 939
65 244
23 583
50 962
1 068 646
75 629
6 104
863 002
55 074
8 457
662 614
3 706
47 247
79 283
7 392
100 343
1 604 899
66 172
7 630
1 492 690
84 909
9 644
882 450
3 594
56 365
134 694
6 847
73 639
2 509 834
95 350
9 113
2 399 569
147 112
9 886
955 084
3 493
62 443
218 276
11 720
81 442
3 572 929
162 325
10 891
2 452 419
59 859
7 148
709 118
2 107
40 602
170 741
6 963
58 641
3 332 278
68 929
12 497
2 378 631
37 197
7 262
819 904
1 583
58 848
304 243
8 856
78 607
3 502 778
47 636
Total
66 910 13 565 727
1 014 255
168 340
8 333 846
44 625
1 184 048
1 265 489
176 877
1 457 833 23 165 062
1 235 757
106
429
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
31.12.2020
(in thousands of years)
Year of
production
Corporate
Mortgage loans
Consumer and other loans
Total
Number of
operations
Amount
Impairment
Number of
operations
Amount
Impairment
Number of
operations
Amount
Impairment
Number of
operations
Amount
Impairment
2004 and prior
4 416
252 369
29 047
63 963
1 297 344
12 791
686 895
53 142
-
755 274
1 602 855
41 838
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
790
66 092
6 232
5 189
201 280
2 323
10 356
7 100
405
16 335
274 472
8 960
1 024
227 895
52 135
7 592
319 853
2 651
17 328
8 929
1 016
25 944
556 677
55 802
1 266
307 258
46 033
11 598
486 328
5 232
24 909
11 885
1 485
37 773
805 471
52 750
1 243
504 523
29 945
11 071
521 485
4 318
19 736
10 131
749
32 050
1 036 139
35 012
958
281 183
40 351
8 830
450 829
4 066
11 761
17 890
8 860
21 549
749 902
53 277
1 179
311 365
88 463
8 374
474 219
3 934
18 110
26 777
1 211
27 663
812 361
93 608
1 178
214 435
48 528
4 671
216 298
2 138
20 701
16 279
1 099
26 550
447 012
51 765
1 451
376 177
133 141
2 562
94 255
1 409
27 270
15 358
2 008
31 283
485 790
136 558
1 980
504 129
116 773
2 969
147 105
1 513
24 607
21 864
9 555
29 556
673 098
127 841
2 008
450 375
192 967
1 880
105 331
3 301
717 339
134 254
2 888
180 326
739
786
24 178
15 969
944
28 066
571 675
194 650
29 146
115 587
90 414
35 335
1 013 252
225 454
4 756
798 567
60 273
5 990
415 630
1 624
48 507
80 968
24 397
59 253
1 295 165
86 294
7 737
1 104 321
64 773
9 280
748 225
3 022
55 051
113 733
10 949
100 343
1 966 279
78 744
8 758
1 897 622
113 881
10 539
988 329
2 700
65 830
187 836
10 847
85 127
3 073 787
127 428
10 234
2 737 975
135 476
10 483
1 021 066
2 348
73 340
287 740
14 862
94 057
4 046 781
152 686
17 021
2 971 582
55 420
7 136
726 643
1 267
46 926
223 167
7 649
71 083
3 921 392
64 336
Total
69 300 13 723 207
1 347 692
175 015
8 394 546
52 861
1 204 651
1 214 355
186 450
1 477 241 23 332 108
1 587 003
The figures presented include, in addition to all new operations of the reference year, renewals, interventions and restructurings of
operations originated in previous years, including the period prior to the setting up of novobanco.
The figures presented include, in addition to all new operations of the reference year, renewals,
interventions and restructurings of operations originated in previous years, including the period prior
to the setting up of novobanco.
39.3.6 – Collaterals
39.3.6 – Collaterals
In order to mitigate credit risk, credit operations have associated guarantees, namely mortgages or pledges. The fair value of these
guarantees is determined at the date of granting the credit and is periodically reassessed. Below is the gross value of the credits and
the respective fair value of the collateral, limited to the value of the associated credit:
In order to mitigate credit risk, credit operations have associated guarantees, namely mortgages
or pledges. The fair value of these guarantees is determined at the date of granting the credit and
is periodically reassessed. Below is the gross value of the credits and the respective fair value of the
collateral, limited to the value of the associated credit:
31.12.2021
31.12.2020
Credit Value
Impairment
Net Value
Fair Value of
Collateral
Credit Value
Impairment
Net Value
8 109 060
161 599
63 186
8 333 845
243 002
213 452
809 035
1 265 489
3 485 173
2 029 706
8 050 849
13 565 728
( 42 816)
( 286)
( 1 523)
( 44 625)
( 4 264)
( 119 813)
( 52 800)
( 176 877)
( 350 183)
( 160 203)
( 503 869)
(1 014 255)
8 066 244
161 313
61 663
8 289 220
238 738
93 639
756 235
1 088 612
3 134 990
1 869 503
7 546 980
12 551 473
8 100 941
155 741
-
8 256 682
240 673
98 804
-
339 477
3 126 828
737 027
-
3 863 855
8 202 521
108 122
83 903
8 394 546
212 611
224 402
777 342
1 214 355
3 574 775
2 189 282
7 959 150
13 723 207
( 47 784)
( 152)
( 4 925)
( 52 861)
( 7 105)
( 122 772)
( 56 573)
( 186 450)
( 552 283)
( 284 388)
( 511 021)
(1 347 692)
8 154 737
107 970
78 978
8 341 685
205 506
101 630
720 769
1 027 905
3 022 492
1 904 894
7 448 129
12 375 515
Mortgage Loans
Mortgages
Pledges
Not collaterized
Other credit to individuals
Mortgages
Pledges
Not collaterized
Corporate Loans
Mortgages
Pledges
Not collaterized
Total
associated.
The difference between the value of the credit and the fair value of the collateral represents the total credit exposure that exceeds
the value of the collateral, this value not being impacted by collaterals with a fair value higher than the credit to which they are
23 165 062
( 1 235 757)
21 929 305
12 460 014
23 332 108
( 1 587 003)
21 745 105
12 526 139
(in thousands of Euros)
Fair Value of
Collateral
8 189 574
107 653
-
8 297 227
210 025
108 797
-
318 822
3 093 988
816 102
-
3 910 090
430
107
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
31.12.2020
(in thousands of years)
Year of
production
Number of
operations
Corporate
Mortgage loans
Consumer and other loans
Total
Amount
Impairment
Amount
Impairment
Amount
Impairment
Amount
Impairment
Number of
operations
Number of
operations
Number of
operations
2004 and prior
4 416
252 369
29 047
63 963
1 297 344
12 791
686 895
53 142
-
755 274
1 602 855
41 838
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
790
66 092
6 232
5 189
201 280
2 323
10 356
7 100
405
16 335
274 472
8 960
1 024
227 895
52 135
7 592
319 853
2 651
17 328
8 929
1 016
25 944
556 677
55 802
1 266
307 258
46 033
11 598
486 328
5 232
24 909
11 885
1 485
37 773
805 471
52 750
1 243
504 523
29 945
11 071
521 485
4 318
19 736
10 131
749
32 050
1 036 139
35 012
958
281 183
40 351
8 830
450 829
4 066
11 761
17 890
8 860
21 549
749 902
53 277
1 179
311 365
88 463
8 374
474 219
3 934
18 110
26 777
1 211
27 663
812 361
93 608
1 178
214 435
48 528
4 671
216 298
2 138
20 701
16 279
1 099
26 550
447 012
51 765
1 451
376 177
133 141
2 562
94 255
1 409
27 270
15 358
2 008
31 283
485 790
136 558
1 980
504 129
116 773
2 969
147 105
1 513
24 607
21 864
9 555
29 556
673 098
127 841
2 008
450 375
192 967
1 880
105 331
24 178
15 969
944
28 066
571 675
194 650
3 301
717 339
134 254
2 888
180 326
29 146
115 587
90 414
35 335
1 013 252
225 454
4 756
798 567
60 273
5 990
415 630
1 624
48 507
80 968
24 397
59 253
1 295 165
86 294
7 737
1 104 321
64 773
9 280
748 225
3 022
55 051
113 733
10 949
100 343
1 966 279
78 744
8 758
1 897 622
113 881
10 539
988 329
2 700
65 830
187 836
10 847
85 127
3 073 787
127 428
739
786
10 234
2 737 975
135 476
10 483
1 021 066
2 348
73 340
287 740
14 862
94 057
4 046 781
152 686
17 021
2 971 582
55 420
7 136
726 643
1 267
46 926
223 167
7 649
71 083
3 921 392
64 336
Total
69 300 13 723 207
1 347 692
175 015
8 394 546
52 861
1 204 651
1 214 355
186 450
1 477 241 23 332 108
1 587 003
The figures presented include, in addition to all new operations of the reference year, renewals, interventions and restructurings of
operations originated in previous years, including the period prior to the setting up of novobanco.
39.3.6 – Collaterals
In order to mitigate credit risk, credit operations have associated guarantees, namely mortgages or pledges. The fair value of these
guarantees is determined at the date of granting the credit and is periodically reassessed. Below is the gross value of the credits and
the respective fair value of the collateral, limited to the value of the associated credit:
Mortgage Loans
Mortgages
Pledges
Not collaterized
Other credit to individuals
Mortgages
Pledges
Not collaterized
Corporate Loans
Mortgages
Pledges
Not collaterized
Total
Credit Value
Impairment
Net Value
Fair Value of
Collateral
Credit Value
Impairment
Net Value
31.12.2021
31.12.2020
8 109 060
161 599
63 186
8 333 845
243 002
213 452
809 035
1 265 489
3 485 173
2 029 706
8 050 849
13 565 728
( 42 816)
( 286)
( 1 523)
( 44 625)
( 4 264)
( 119 813)
( 52 800)
( 176 877)
( 350 183)
( 160 203)
( 503 869)
(1 014 255)
8 066 244
161 313
61 663
8 289 220
238 738
93 639
756 235
1 088 612
3 134 990
1 869 503
7 546 980
12 551 473
8 100 941
155 741
-
8 256 682
240 673
98 804
-
339 477
3 126 828
737 027
-
3 863 855
8 202 521
108 122
83 903
8 394 546
212 611
224 402
777 342
1 214 355
3 574 775
2 189 282
7 959 150
13 723 207
( 47 784)
( 152)
( 4 925)
( 52 861)
( 7 105)
( 122 772)
( 56 573)
( 186 450)
( 552 283)
( 284 388)
( 511 021)
(1 347 692)
8 154 737
107 970
78 978
8 341 685
205 506
101 630
720 769
1 027 905
3 022 492
1 904 894
7 448 129
12 375 515
(in thousands of Euros)
Fair Value of
Collateral
8 189 574
107 653
-
8 297 227
210 025
108 797
-
318 822
3 093 988
816 102
-
3 910 090
23 165 062
( 1 235 757)
21 929 305
12 460 014
23 332 108
( 1 587 003)
21 745 105
12 526 139
The difference between the value of the credit and the fair value of the collateral represents the total credit exposure that exceeds
the value of the collateral, this value not being impacted by collaterals with a fair value higher than the credit to which they are
associated.
The difference between the value of the credit and the fair value of the collateral represents the total
credit exposure that exceeds the value of the collateral, this value not being impacted by collaterals
with a fair value higher than the credit to which they are associated.
The details of the collateral – mortgages are presented as follows:
The details of the collateral – mortgages are presented as follows:
31.12.2021
(in tousands of Euros)
Collateral Intervals a)
Mortgage Loans
Other Private Loans
Corporate Loans
Total
Number
Amount
Number
Amount
Number
Amount
Number
Amount
<0,5M€
162 672
7 875 489
5 625
227 443
>= 0,5M€ e <1,0M€
>= 1,0M€ e <5,0M€
>= 5,0M€ e <10,0M€
>= 10,0M€ e <20,0M€
>= 20,0M€ e <50,0M€
>=50M€
264
47
161 929
63 523
-
-
-
-
-
-
-
-
14
3
-
-
-
-
6 039
7 191
-
-
-
-
10 326
1 935
18 518
13 225
2 241
155
1 565
466 686
178 623
8 569 618
252 393
794 583
460 762
530 515
451 567
170 322
2 213
18 568
13 225
2 241
155
1 565
420 361
107
865 297
460 762
530 515
451 567
170 322
162 983
8 100 941
5 642
240 673
47 965
3 126 828
216 590
11 468 442
a) The allocation per intervals was made based on the total value of collateral per credit contract
31.12.2020
(in tousands of Euros)
Collateral Intervals a)
Mortgage Loans
Other Private Loans
Corporate Loans
Total
Number
Amount
Number
Amount
Number
Amount
Number
Amount
<0,5M€
169 495
7 996 840
4 920
194 590
>= 0,5M€ e <1,0M€
>= 1,0M€ e <5,0M€
>= 5,0M€ e <10,0M€
>= 10,0M€ e <20,0M€
>= 20,0M€ e <50,0M€
>=50M€
248
36
146 377
46 357
-
-
-
-
-
-
-
-
26
3
-
-
-
-
8 552
6 883
-
-
-
-
8 919
2 173
7 509
5 979
4 014
170
1 566
481 531
183 334
8 672 961
259 748
830 667
401 084
477 539
471 926
171 493
2 447
7 548
5 979
4 014
170
1 566
414 677
883 907
401 084
477 539
471 926
171 493
169 779
8 189 574
4 949
210 025
30 330
3 093 988
205 058
11 493 587
a) The allocation per intervals was made based on the total value of collateral per credit contract
The values of mortgages collateral, presented above, represent the maximum coverage value of the covered assets, that is, that
compete up to the gross value of the individual credits covered.
In assessing the risk of an operation or set of operations, the elements of credit risk mitigation associated with them are taken into
account, in accordance with internal rules and procedures.
The relevant collaterals are essentially the following:
Real estate, where the value considered is the correspondent to the last available valuation;
Financial pledges, where the value considered corresponds to the quotation on the last day of the month, in the case of being a
listed security, or the value of the pledge, in the case of being cash.
The acceptance of collateral as a guarantee for credit operations refers to the need to define and implement risk mitigation techniques
to which these collaterals are exposed. Thus, and as an approach to this matter, the Bank stipulated a set of procedures applicable
to collateral (namely financial and real estate), which cover, among others, the volatility of the collateral value, its liquidity and also
an indication as to the recovery rates associated with each type of collateral.
The internal rules on credit powers thus have a specific chapter on this point, "Acceptance of collateral - techniques for mitigating the
risks to which collateral is exposed, namely liquidity and volatility risks".
The revaluation process for real estate is performed by independent valuation experts registered in CMVM, following the
methodologies as described in Note 7.6.
431
108
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The details of the collateral – mortgages are presented as follows:
31.12.2021
(in tousands of Euros)
Collateral Intervals a)
Mortgage Loans
Other Private Loans
Corporate Loans
Total
Number
Amount
Number
Amount
Number
Amount
Number
Amount
<0,5M€
162 672
7 875 489
5 625
227 443
466 686
178 623
8 569 618
>= 0,5M€ e <1,0M€
>= 1,0M€ e <5,0M€
>= 5,0M€ e <10,0M€
>= 10,0M€ e <20,0M€
>= 20,0M€ e <50,0M€
>=50M€
264
47
161 929
63 523
-
-
-
-
-
-
-
-
14
3
-
-
-
-
6 039
7 191
-
-
-
-
10 326
1 935
18 518
13 225
2 241
155
1 565
252 393
794 583
460 762
530 515
451 567
170 322
2 213
18 568
13 225
2 241
155
1 565
420 361
865 297
460 762
530 515
451 567
170 322
162 983
8 100 941
5 642
240 673
47 965
3 126 828
216 590
11 468 442
a) The allocation per intervals was made based on the total value of collateral per credit contract
31.12.2020
(in tousands of Euros)
Collateral Intervals a)
Mortgage Loans
Other Private Loans
Corporate Loans
Total
Number
Amount
Number
Amount
Number
Amount
Number
Amount
<0,5M€
169 495
7 996 840
4 920
194 590
>= 0,5M€ e <1,0M€
>= 1,0M€ e <5,0M€
>= 5,0M€ e <10,0M€
>= 10,0M€ e <20,0M€
>= 20,0M€ e <50,0M€
>=50M€
248
36
146 377
46 357
-
-
-
-
-
-
-
-
26
3
-
-
-
-
8 552
6 883
-
-
-
-
8 919
2 173
7 509
5 979
4 014
170
1 566
481 531
183 334
8 672 961
259 748
830 667
401 084
477 539
471 926
171 493
2 447
7 548
5 979
4 014
170
1 566
414 677
883 907
401 084
477 539
471 926
171 493
169 779
8 189 574
4 949
210 025
30 330
3 093 988
205 058
11 493 587
a) The allocation per intervals was made based on the total value of collateral per credit contract
The values of mortgages collateral, presented above, represent the maximum coverage value of the covered assets, that is, that
compete up to the gross value of the individual credits covered.
The values of mortgages collateral, presented above, represent the maximum coverage value of the
covered assets, that is, that compete up to the gross value of the individual credits covered.
In assessing the risk of an operation or set of operations, the elements of credit risk mitigation associated with them are taken into
account, in accordance with internal rules and procedures.
real estate), which cover, among others, the volatility of the collateral value, its liquidity and also an
indication as to the recovery rates associated with each type of collateral.
In assessing the risk of an operation or set of operations, the elements of credit risk mitigation
associated with them are taken into account, in accordance with internal rules and procedures.
The internal rules on credit powers thus have a specific chapter on this point, “Acceptance of collateral
- techniques for mitigating the risks to which collateral is exposed, namely liquidity and volatility risks”.
The relevant collaterals are essentially the following:
The relevant collaterals are essentially the following:
Real estate, where the value considered is the correspondent to the last available valuation;
• Real estate, where the value considered is the correspondent to the last available valuation;
Financial pledges, where the value considered corresponds to the quotation on the last day of the month, in the case of being a
listed security, or the value of the pledge, in the case of being cash.
The revaluation process for real estate is performed by independent valuation experts registered in
CMVM, following the methodologies as described in Note 7.6.
• Financial pledges, where the value considered corresponds to the quotation on the last day of the
month, in the case of being a listed security, or the value of the pledge, in the case of being cash.
The acceptance of collateral as a guarantee for credit operations refers to the need to define and implement risk mitigation techniques
to which these collaterals are exposed. Thus, and as an approach to this matter, the Bank stipulated a set of procedures applicable
to collateral (namely financial and real estate), which cover, among others, the volatility of the collateral value, its liquidity and also
an indication as to the recovery rates associated with each type of collateral.
The analysis of risk exposure by sector of activity, as at 31 December 2021 and 2020, is presented as
follows:
The acceptance of collateral as a guarantee for credit operations refers to the need to define and
implement risk mitigation techniques to which these collaterals are exposed. Thus, and as an approach
to this matter, the Bank stipulated a set of procedures applicable to collateral (namely financial and
39.3.7 - Credit risk concentration
The internal rules on credit powers thus have a specific chapter on this point, "Acceptance of collateral - techniques for mitigating the
risks to which collateral is exposed, namely liquidity and volatility risks".
The revaluation process for real estate is performed by independent valuation experts registered in CMVM, following the
methodologies as described in Note 7.6.
432
108
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
39.3.7 – Credit risk concentration
The analysis of risk exposure by sector of activity, as at 31 December 2021 and 2020, is presented as follows:
31.12.2021
(in thousands of Euros)
Loans and advances to
customers
Gross
amount
Impairment
Financial
assets held
for trading
Derivatives
for trading
Financial assets
at fair value
through profit or
loss -mandatory
Derivatives
held for risk
management
purposes
Agriculture, Forestry and Fishery
Mining
Food, Beverages and Tobacco
Textiles and Clothing
Leather and Shoes
Wood and Cork
Paper and Printing Industry
Refining of Petroleum
Chemicals and Rubber
Non-metallic Minerals
Metallurgical Industries and Metallic Products
Production of Machinery, Equipment and Electrical De.
Production of Transport Material
Other Transforming Industries
Electricity, Gas and Water
Construction and Public Works
Wholesale and Retail Trade
Tourism
Transport and Communication
Financial Activities
Real Estate Activities
Services Provided to Companies
Public Administration and Services
Other activities of collective services
Mortgage Loans
Consumers Loans
Others
311 832
40 882
507 539
366 985
79 044
108 090
148 885
11 459
337 394
166 695
389 961
170 624
118 847
140 459
293 197
1 288 788
1 366 114
1 029 948
861 457
483 518
1 650 174
2 429 405
571 501
581 079
8 333 846
1 265 489
111 850
( 8 492)
( 333)
( 14 190)
( 13 791)
( 728)
( 2 866)
( 10 071)
( 20)
( 5 155)
( 3 112)
( 11 905)
( 9 123)
( 3 514)
( 10 598)
( 3 320)
( 134 972)
( 40 405)
( 96 443)
( 51 305)
( 44 807)
( 144 160)
( 238 573)
( 22 809)
( 75 218)
( 44 625)
( 176 877)
( 68 345)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
114 465
-
-
-
-
397
-
7 233
290
5
500
96
-
271
-
370
159
43
-
17 062
75 005
765
191
49 111
101 455
6 281
3 250
-
758
-
-
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2 133 630
2 751
111 549
-
2 378
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20 150
-
-
-
-
-
-
-
Financial assets at fair
value through other
comprehensive income
Financial assets at
amortised cost
Guarantees and
endorsements provided
Gross
amount
29 007
14 189
-
-
-
-
-
-
19 410
-
16 235
66 078
-
-
53 579
-
40 669
118
96 999
909 281
908
78 561
5 685 319
123 155
-
-
-
Impairment
( 14)
( 13)
-
-
-
-
-
-
( 13)
-
( 11)
( 49)
-
-
( 41)
-
( 29)
-
( 61)
( 317)
-
( 45)
( 2 995)
( 80)
-
-
-
Gross
amount
20 249
19 391
75 391
4 298
1 501
2 199
1 497
40 793
133 694
33 754
1 299
48 010
15 046
4 983
113 203
196 417
49 398
-
42 850
1 045 549
178 280
655 753
371 273
83 637
-
-
-
Impairment
Gross
amount
Impairment
( 45)
( 4)
( 195)
( 2)
( 6)
( 12)
( 4)
( 22)
( 123)
( 153)
( 62)
( 24)
( 8)
( 20)
( 3 988)
( 94 332)
( 53)
-
( 178)
( 2 254)
( 33 430)
( 111 600)
( 540)
( 717)
-
-
-
11 175
5 841
49 419
7 450
1 363
7 322
2 150
4 022
18 453
15 122
31 575
20 425
10 625
19 208
33 018
667 673
200 010
51 565
347 343
151 950
107 266
386 254
19 965
36 158
-
-
16 223
( 6 318)
( 183)
( 319)
( 741)
( 122)
( 259)
( 18)
( 1)
( 80)
( 297)
( 456)
( 2 248)
( 526)
( 2 821)
( 687)
( 37 863)
( 3 401)
( 1 024)
( 2 008)
( 3 408)
( 5 075)
( 10 111)
( 108)
( 959)
-
-
( 306)
TOTAL
23 165 062
( 1 235 757)
114 465
263 244
2 250 308
20 150
7 133 508
( 3 668)
3 138 465
( 247 772)
2 221 575
( 79 339)
31.12.2020
(in thousands of Euros)
Loans and advances to
customers
Gross
amount
Impairment
Financial
assets held
for trading
Derivatives
for trading
Financial assets
at fair value
through profit or
loss -mandatory
Derivatives
held for risk
management
purposes
Agriculture, Forestry and Fishery
Mining
Food, Beverages and Tobacco
Textiles and Clothing
Leather and Shoes
Wood and Cork
Paper and Printing Industry
Refining of Petroleum
Chemicals and Rubber
Non-metallic Minerals
Metallurgical Industries and Metallic Products
Production of Machinery, Equipment and Electrical De.
Production of Transport Material
Other Transforming Industries
Electricity, Gas and Water
Construction and Public Works
Wholesale and Retail Trade
Tourism
Transport and Communication
Financial Activities
Real Estate Activities
Services Provided to Companies
Public Administration and Services
Other activities of collective services
Mortgage Loans
Consumers Loans
Others
312 351
74 466
529 565
355 642
72 598
116 210
203 317
9 867
322 420
125 466
359 607
140 719
118 807
140 305
335 699
1 385 292
1 351 020
958 614
866 433
485 232
1 767 550
2 315 390
582 452
675 917
8 394 546
1 214 355
118 268
( 10 816)
( 18 596)
( 16 540)
( 15 805)
( 3 184)
( 3 847)
( 18 887)
( 14)
( 5 174)
( 7 753)
( 12 454)
( 9 055)
( 2 996)
( 11 021)
( 19 027)
( 165 139)
( 53 925)
( 80 109)
( 53 225)
( 61 084)
( 220 722)
( 319 495)
( 26 260)
( 142 699)
( 52 861)
( 186 450)
( 69 865)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
267 016
-
-
-
-
690
-
10 113
255
-
236
27
-
1 576
-
281
349
78
-
22 809
97 763
3 741
362
67 527
163 852
8 147
9 034
-
1 471
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2 261 955
-
181 272
-
2 378
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13 606
-
-
-
-
-
-
-
Financial assets at fair
value through other
comprehensive income
Financial assets at
amortised cost
Guarantees and
endorsements provided
Gross
amount
29 227
-
-
-
-
-
-
-
19 597
16 483
16 533
42 692
-
-
33 978
-
41 174
182
99 577
745 465
867
95 545
6 406 747
99 878
-
-
165 639
Impairment
( 13)
-
-
-
-
-
-
-
( 13)
( 14)
( 10)
( 26)
-
-
( 25)
-
( 27)
-
( 63)
( 249)
-
( 53)
( 3 095)
( 58)
-
-
( 14)
Gross
amount
19 196
18 380
73 076
1 197
-
12 512
31 483
40 135
131 643
3 441
1 498
45 059
15 039
4 987
138 950
182 619
43 686
-
11 639
1 039 119
100 777
705 450
415 192
42 264
-
-
-
Impairment
Gross
amount
Impairment
( 26)
( 4)
( 2 277)
-
-
( 49)
( 48)
( 20)
( 67)
( 4)
( 21)
( 22)
( 8)
( 35)
( 418)
( 60 754)
( 43)
-
( 16)
( 2 204)
( 26 181)
( 109 627)
( 576)
( 60)
-
-
-
12 375
7 878
50 423
9 336
2 074
6 546
3 542
1 804
18 684
18 441
42 634
64 734
12 254
18 390
100 480
884 307
199 766
61 959
376 299
133 904
213 583
386 470
23 746
142 323
35
6 584
17 349
( 517)
( 101)
( 413)
( 4 545)
( 107)
( 32)
( 30)
-
( 176)
( 365)
( 326)
( 1 126)
( 106)
( 767)
( 69)
( 41 058)
( 3 933)
( 6 338)
( 9 104)
( 1 231)
( 15 437)
( 4 216)
( 279)
( 1 109)
-
( 345)
( 175)
TOTAL
23 332 108
( 1 587 003)
267 016
388 311
2 445 605
13 606
7 813 584
( 3 660)
3 077 342
( 202 460)
2 815 920
( 91 905)
433
109
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Exposure to public debt in peripheral Eurozone countries
As at 31 December 2021 and 2020, the Bank’s exposure to the public debt of “peripheral” countries in
the Eurozone is as follows:
Exposure to public debt in peripheral Eurozone countries
As at 31 December 2021 and 2020, the Bank's exposure to the public debt of “peripheral” countries in the Eurozone is as follows:
31.12.2021
(in thousands of Euros)
Loans to
customers
Securities held
for trading
Derivative
Instruments (1)
Securities at fair value
through other
comprehensive
income
Securities at
amortized cost
Total
546 563
-
-
-
114 465
-
-
-
546 563
114 465
-
-
-
-
-
2 492 521
1 619 260
171 608
148 601
370 733
-
-
-
3 524 282
1 619 260
171 608
148 601
4 431 990
370 733
5 463 751
Portugal
Spain
Ireland
Italy
(1) Amounts presented by net: receivable / (payable)
31.12.2020
(in thousands of Euros)
Loans to
customers
Securities held
for trading
Derivative
Instruments (1)
Securities at fair value
through other
comprehensive
income
Securities at
amortized cost
Total
582 452
-
-
-
267 016
-
-
-
582 452
267 016
( 16)
-
-
-
( 16)
2 696 862
2 039 075
237 844
52 044
458 556
-
-
-
4 004 870
2 039 075
237 844
52 044
5 025 825
458 556
6 333 833
Portugal
Spain
Ireland
Italy
(1) Amounts presented by net: receivable / (payable)
Except for Loans and advances to customers, all the exposures presented above, except those relating to loans and advances to
customers, are recorded in the Bank balance sheet at fair value, based on market quotations or, in the case derivatives, based on
valuation techniques using observable market parameters / prices.
Except for Loans and advances to customers, all the exposures presented above, except those relating
to loans and advances to customers, are recorded in the Bank balance sheet at fair value, based on
market quotations or, in the case derivatives, based on valuation techniques using observable market
parameters / prices.
The detail on the exposure to securities is as follows:
(in thousands of Euros)
The detail on the exposure to securities is as follows:
31.12.2021
Nominal
value
Quotation
Value
Accrued
interest
Book value
Impairment
Fair Value
Reserves
Securities at fair value through other comprehensive income
Portugal
Maturity up to 1 year
Maturity over 1 year
Spain
Maturity up to 1 year
Maturity over 1 year
Ireland
Italy
Maturity over 1 year
Maturity over 1 year
Securities at amortized cost
Portugal
Maturity over 1 year
Securities held for trading
Portugal
2 231 290
411 385
1 819 905
1 529 200
755 000
774 200
153 600
153 600
148 561
148 561
2 466 964
418 663
2 048 301
1 594 096
758 261
835 835
170 350
170 350
148 286
148 286
25 557
1 581
23 976
25 164
17 334
7 830
1 258
1 258
315
315
2 492 521
420 244
2 072 277
1 619 260
775 595
843 665
171 608
171 608
148 601
148 601
369 646
369 646
418 828
418 828
369 646
418 828
1 627
1 627
1 627
370 733
370 733
370 733
106 500
114 017
106 500
114 017
448
448
114 465
114 465
-
-
-
-
-
-
-
-
-
-
540
540
540
-
-
434
86 400
2 986
83 414
46 283
1 729
44 554
13 457
13 457
215
215
-
-
-
-
-
110
4 062 651
4 379 696
52 294
4 431 990
-
146 355
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Exposure to public debt in peripheral Eurozone countries
As at 31 December 2021 and 2020, the Bank's exposure to the public debt of “peripheral” countries in the Eurozone is as follows:
(in thousands of Euros)
(1) Amounts presented by net: receivable / (payable)
546 563
114 465
4 431 990
370 733
5 463 751
31.12.2021
Securities at fair value
Loans to
Securities held
customers
for trading
Derivative
Instruments (1)
through other
Securities at
comprehensive
amortized cost
Total
546 563
114 465
370 733
income
2 492 521
1 619 260
171 608
148 601
income
2 696 862
2 039 075
237 844
52 044
-
-
-
-
-
-
-
-
3 524 282
1 619 260
171 608
148 601
(in thousands of Euros)
4 004 870
2 039 075
237 844
52 044
-
-
-
-
-
-
31.12.2020
Securities at fair value
Loans to
Securities held
customers
for trading
Derivative
Instruments (1)
through other
Securities at
comprehensive
amortized cost
Total
582 452
267 016
( 16)
458 556
-
-
-
-
-
-
-
-
-
-
-
-
Portugal
Spain
Ireland
Italy
Portugal
Spain
Ireland
Italy
(1) Amounts presented by net: receivable / (payable)
582 452
267 016
( 16)
5 025 825
458 556
6 333 833
Except for Loans and advances to customers, all the exposures presented above, except those relating to loans and advances to
customers, are recorded in the Bank balance sheet at fair value, based on market quotations or, in the case derivatives, based on
valuation techniques using observable market parameters / prices.
The detail on the exposure to securities is as follows:
31.12.2021
Nominal
value
Quotation
Value
Accrued
interest
Book value
Impairment
Fair Value
Reserves
(in thousands of Euros)
Securities at fair value through other comprehensive income
Portugal
Maturity up to 1 year
Maturity over 1 year
Spain
Maturity up to 1 year
Maturity over 1 year
Ireland
Maturity over 1 year
Italy
Maturity over 1 year
Securities at amortized cost
Portugal
Maturity over 1 year
Securities held for trading
Portugal
2 231 290
411 385
1 819 905
1 529 200
755 000
774 200
153 600
153 600
148 561
148 561
2 466 964
418 663
2 048 301
1 594 096
758 261
835 835
170 350
170 350
148 286
148 286
25 557
1 581
23 976
25 164
17 334
7 830
1 258
1 258
315
315
2 492 521
420 244
2 072 277
1 619 260
775 595
843 665
171 608
171 608
148 601
148 601
-
-
-
-
-
-
-
-
-
-
86 400
2 986
83 414
46 283
1 729
44 554
13 457
13 457
215
215
4 062 651
4 379 696
52 294
4 431 990
-
146 355
369 646
369 646
418 828
418 828
369 646
418 828
1 627
1 627
1 627
370 733
370 733
370 733
106 500
114 017
106 500
114 017
448
448
114 465
114 465
540
540
540
-
-
-
-
-
-
-
31.12.2020
Nominal
value
Quotation
Value
Accrued
interest
Book value
Impairment
Fair Value
Reserves
(in thousands of Euros)
Securities at fair value through other comprehensive income
Portugal
Maturity up to 1 year
Maturity over 1 year
Spain
Maturity over 1 year
Ireland
Maturity over 1 year
Italy
Maturity over 1 year
Securities at amortized cost
Portugal
Maturity over 1 year
Securities held for trading
Portugal
2 346 882
196 679
2 150 203
2 671 267
199 933
2 471 334
1 894 750
1 514 750
2 012 871
1 630 359
193 600
193 600
236 205
236 205
49 821
49 821
51 854
51 854
25 595
913
24 682
26 204
25 144
1 639
1 639
190
190
2 696 862
200 846
2 496 016
2 039 075
1 655 503
237 844
237 844
52 044
52 044
110
125 602
600
125 002
75 509
74 029
39 340
39 340
2 561
2 561
-
-
-
-
-
-
-
-
-
4 485 053
4 972 197
53 628
5 025 825
-
243 012
413 438
413 438
472 552
472 552
413 438
472 552
213 500
264 033
213 500
264 033
1 754
1 754
1 754
2 983
2 983
458 556
458 556
458 556
267 016
267 016
576
576
576
-
-
-
-
-
-
-
39.3.8 - Forborne modified loans
The Bank proceeds to the identification and register of restructured credit contracts due to the client's financial difficulties whenever
there are changes to the terms and conditions of a contract in which the client has defaulted, that is, it is foreseeable that it will default,
with a financial obligation. It is considered that there is a change to the terms and conditions of the contract when (i) there are
contractual changes to the benefit of the customer, such as extending the term, introducing grace periods, reducing the rate or partial
debt forgiveness; (ii) there is a contracting of a new credit operation to settle the existing debt (total or partial); or (iii) the new terms
of the contract are more favorable than those applied to other customers with the same risk profile.
The cancellation of a restructured credit due to the client's financial difficulties can only occur after a minimum period of two years
from the date of the restructuring, provided that the following conditions are cumulatively fulfilled: (i) regular payment of capital and
interest; (ii) the customer has no capital or interest due; and (iii) there were no debt restructuring mechanisms by the client in that
period.
The amounts of the restructured loans due to financial difficulties of the customer as of 31 December 2021 and 2020, are as follows:
435
Corporate
Mortgage loans
Consumer and other loans
Total
31.12.2021
31.12.2020
(in thousands of Euros)
1 272 621
128 219
137 276
1 778 103
129 041
146 359
1 538 116
2 053 503
The details of the restructuring measures applied to restructured loans up to 31 December 2021 and 2020 are shown below:
Solution
Performing
No.
Transaction
No.
Transaction
Total
No.
Transaction
Exposure
Impairment
Exposure
Impairment
Exposure
Impairment
31.12.2021
Non - Performing
(in thousands of Euros)
Principal or interest forgiveness
Assets received in partial settlement of loan
Capitalization of interest
New loan in total or partial payment of existing loan
Extension of repayment period
Introduction of grace period of principal or interest
Decrease in the interest rates
Changes of the lease payment plan
Changes in the interest paymen
Other
Total
14 027
1 886
163 190
98 330
135
177 217
100 216
37
16
35
335
82
112
3
1 307
2 100
170 750
389 220
1 043
6 754
27 700
10 549
6 994
2 017
145
346
12 664
60 170
783
459
390
228
675
1 193
17 015
98
19
100
422
859
80
24
44
2
274
434 881
272 462
824 101
332 632
420
79 248
121 570
55 167
19 823
8 682
1 997
7 069
195
46 515
57 096
25 157
6 050
2 885
1 694
3 265
35
135
1 729
2 959
415
106
156
5
1 463
86 002
292 320
82 867
30 372
15 676
4 014
1 467
24 084
5 220
646 069
77 746
1 922
892 047
513 649
7 142
1 538 116
591 395
340
46 861
69 760
25 940
6 509
3 275
1 922
3 940
111
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Securities at fair value through other comprehensive income
31.12.2020
Securities at fair value through other comprehensive income
31.12.2020
Nominal
Quotation
Accrued
value
Value
interest
Book value
Impairment
(in thousands of Euros)
Fair Value
Reserves
(in thousands of Euros)
2 346 882
Nominal
196 679
value
2 150 203
2 671 267
Quotation
199 933
Value
2 471 334
25 595
Accrued
interest
913
24 682
2 696 862
Book value
200 846
2 496 016
Impairment
Fair Value
125 602
Reserves
600
125 002
Portugal
Maturity up to 1 year
Maturity over 1 year
Spain
Portugal
Maturity over 1 year
Maturity up to 1 year
Ireland
Maturity over 1 year
Maturity over 1 year
Spain
Italy
Maturity over 1 year
Maturity over 1 year
Ireland
Maturity over 1 year
Italy
Securities at amortized cost
Maturity over 1 year
Portugal
Maturity over 1 year
Securities at amortized cost
Portugal
Securities held for trading
Maturity over 1 year
Portugal
1 894 750
2 346 882
1 514 750
196 679
193 600
2 150 203
193 600
1 894 750
1 514 750
49 821
49 821
193 600
4 485 053
193 600
49 821
49 821
413 438
413 438
4 485 053
2 012 871
2 671 267
1 630 359
199 933
236 205
2 471 334
236 205
2 012 871
1 630 359
51 854
51 854
236 205
4 972 197
236 205
51 854
51 854
472 552
472 552
4 972 197
413 438
472 552
413 438
413 438
213 500
472 552
472 552
264 033
413 438
213 500
472 552
264 033
26 204
25 595
25 144
913
1 639
24 682
1 639
26 204
25 144
190
190
1 639
53 628
1 639
190
190
1 754
1 754
53 628
1 754
1 754
1 754
2 983
1 754
2 983
2 039 075
2 696 862
1 655 503
200 846
237 844
2 496 016
237 844
2 039 075
1 655 503
52 044
52 044
237 844
5 025 825
237 844
52 044
52 044
458 556
458 556
5 025 825
458 556
458 556
458 556
267 016
458 556
267 016
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
576
576
-
576
576
576
-
576
-
75 509
125 602
74 029
600
39 340
125 002
39 340
75 509
2 561
74 029
2 561
39 340
243 012
39 340
2 561
2 561
243 012
-
-
-
-
-
-
-
-
-
Securities held for trading
39.3.8 - Forborne modified loans
Portugal
213 500
264 033
2 983
267 016
-
213 500
264 033
2 983
267 016
-
39.3.8 - Forborne modified loans
The Bank proceeds to the identification and register of restructured credit contracts due to the client's financial difficulties whenever
there are changes to the terms and conditions of a contract in which the client has defaulted, that is, it is foreseeable that it will default,
39.3.8 - Forborne modified loans
with a financial obligation. It is considered that there is a change to the terms and conditions of the contract when (i) there are
contractual changes to the benefit of the customer, such as extending the term, introducing grace periods, reducing the rate or partial
The Bank proceeds to the identification and register of restructured credit contracts due to the client's financial difficulties whenever
debt forgiveness; (ii) there is a contracting of a new credit operation to settle the existing debt (total or partial); or (iii) the new terms
there are changes to the terms and conditions of a contract in which the client has defaulted, that is, it is foreseeable that it will default,
of the contract are more favorable than those applied to other customers with the same risk profile.
with a financial obligation. It is considered that there is a change to the terms and conditions of the contract when (i) there are
contractual changes to the benefit of the customer, such as extending the term, introducing grace periods, reducing the rate or partial
The cancellation of a restructured credit due to the client's financial difficulties can only occur after a minimum period of two years
debt forgiveness; (ii) there is a contracting of a new credit operation to settle the existing debt (total or partial); or (iii) the new terms
from the date of the restructuring, provided that the following conditions are cumulatively fulfilled: (i) regular payment of capital and
of the contract are more favorable than those applied to other customers with the same risk profile.
interest; (ii) the customer has no capital or interest due; and (iii) there were no debt restructuring mechanisms by the client in that
period.
The cancellation of a restructured credit due to the client's financial difficulties can only occur after a minimum period of two years
from the date of the restructuring, provided that the following conditions are cumulatively fulfilled: (i) regular payment of capital and
The amounts of the restructured loans due to financial difficulties of the customer as of 31 December 2021 and 2020, are as follows:
interest; (ii) the customer has no capital or interest due; and (iii) there were no debt restructuring mechanisms by the client in that
period.
The Bank proceeds to the identification and register of restructured credit contracts due to the
client’s financial difficulties whenever there are changes to the terms and conditions of a contract in
which the client has defaulted, that is, it is foreseeable that it will default, with a financial obligation.
It is considered that there is a change to the terms and conditions of the contract when (i) there are
contractual changes to the benefit of the customer, such as extending the term, introducing grace
periods, reducing the rate or partial debt forgiveness; (ii) there is a contracting of a new credit operation
to settle the existing debt (total or partial); or (iii) the new terms of the contract are more favorable
than those applied to other customers with the same risk profile.
The cancellation of a restructured credit due to the client’s financial difficulties can only occur after a
minimum period of two years from the date of the restructuring, provided that the following conditions
are cumulatively fulfilled: (i) regular payment of capital and interest; (ii) the customer has no capital or
interest due; and (iii) there were no debt restructuring mechanisms by the client in that period.
The amounts of the restructured loans due to financial difficulties of the customer as of 31 December
2021 and 2020, are as follows:
-
(in thousands of Euros)
The amounts of the restructured loans due to financial difficulties of the customer as of 31 December 2021 and 2020, are as follows:
31.12.2021
31.12.2020
Corporate
Mortgage loans
Consumer and other loans
1 272 621
128 219
137 276
31.12.2021
(in thousands of Euros)
1 778 103
129 041
146 359
31.12.2020
The details of the restructuring measures applied to restructured loans up to 31 December 2021 and 2020 are shown below:
The details of the restructuring measures applied to restructured loans up to 31 December 2021 and
2020 are shown below:
Performing
Total
Solution
31.12.2021
Non - Performing
1 538 116
(in thousands of Euros)
2 053 503
Total
The details of the restructuring measures applied to restructured loans up to 31 December 2021 and 2020 are shown below:
Exposure
Impairment
Impairment
Exposure
No.
Transaction
Exposure
Impairment
(in thousands of Euros)
No.
Transaction
37
16
35
No.
Transaction
1 307
14 027
1 043
Performing
6 754
Exposure
170 750
No.
Transaction
1 886
145
98
31.12.2021
163 190
98 330
135
177 217
100 216
19
Non - Performing
420
195
35
346
Impairment
12 664
100
No.
Transaction
422
79 248
Exposure
121 570
46 515
Impairment
57 096
135
No.
Transaction
1 729
1 463
Total
86 002
Exposure
292 320
1 272 621
1 538 116
128 219
137 276
1 778 103
2 053 503
129 041
146 359
2 100
37
335
16
82
35
112
1 307
3
2 100
1 193
335
82
5 220
112
389 220
14 027
27 700
1 043
10 549
6 754
6 994
170 750
2 017
389 220
17 015
27 700
10 549
646 069
6 994
3
2 017
1 193
17 015
60 170
1 886
783
145
459
346
390
12 664
228
60 170
675
783
459
77 746
390
228
675
859
98
80
19
24
100
44
422
2
859
274
80
24
1 922
44
2
274
434 881
163 190
55 167
420
19 823
79 248
8 682
121 570
1 997
434 881
7 069
55 167
19 823
892 047
8 682
1 997
7 069
272 462
98 330
25 157
195
6 050
46 515
2 885
57 096
1 694
272 462
3 265
25 157
6 050
513 649
2 885
1 694
3 265
2 959
135
415
35
106
135
156
1 729
5
2 959
1 467
415
106
7 142
156
824 101
177 217
82 867
1 463
30 372
86 002
15 676
292 320
4 014
824 101
24 084
82 867
30 372
1 538 116
15 676
5
4 014
1 467
24 084
340
46 861
Impairment
69 760
332 632
100 216
25 940
340
6 509
46 861
3 275
69 760
1 922
332 632
3 940
25 940
6 509
591 395
3 275
111
1 922
3 940
5 220
646 069
77 746
1 922
892 047
513 649
7 142
1 538 116
591 395
111
436
Corporate
Total
Mortgage loans
Consumer and other loans
Principal or interest forgiveness
Assets received in partial settlement of loan
Solution
Capitalization of interest
New loan in total or partial payment of existing loan
Extension of repayment period
Principal or interest forgiveness
Introduction of grace period of principal or interest
Assets received in partial settlement of loan
Decrease in the interest rates
Capitalization of interest
Changes of the lease payment plan
New loan in total or partial payment of existing loan
Changes in the interest paymen
Extension of repayment period
Other
Introduction of grace period of principal or interest
Decrease in the interest rates
Total
Changes of the lease payment plan
Changes in the interest paymen
Other
Total
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Solution
Principal or interest forgiveness
Assets received in partial settlement of loan
Solution
Capitalization of interest
New loan in total or partial payment of existing loan
Principal or interest forgiveness
Extension of repayment period
Assets received in partial settlement of loan
Introduction of grace period of principal or interest
Capitalization of interest
Decrease in the interest rates
New loan in total or partial payment of existing loan
Changes of the lease payment plan
Extension of repayment period
Changes in the interest paymen
Introduction of grace period of principal or interest
Other
Decrease in the interest rates
Total
Changes of the lease payment plan
Changes in the interest paymen
Other
39.4 - Market risk
Total
Performing
31.12.2020
Non - Performing
Exposure
Impairment
No.
Transaction
Exposure
Impairment
57 740
Performing
1 104
3 922
159
Exposure
12 951
Impairment
995
87 691
57 740
513 686
1 104
33 497
12 951
13 795
87 691
9 574
513 686
15
33 497
25 256
13 795
755 309
9 574
10 024
3 922
81 688
159
1 504
995
466
10 024
783
81 688
1
1 504
1 108
466
100 650
783
31.12.2020
171 857
Non - Performing
2 043
147
21
103 632
1 893
No.
181
Transaction
549
147
908
21
106
181
30
549
71
908
2
106
640
30
2 655
71
Exposure
123 462
Impairment
74 085
228 736
171 857
585 153
2 043
60 007
123 462
65 171
228 736
39 596
585 153
2 769
60 007
19 400
65 171
1 298 194
39 596
145 098
103 632
379 784
1 893
28 009
74 085
23 549
145 098
21 771
379 784
2 380
28 009
13 865
23 549
794 066
21 771
No.
Transaction
43
20
No.
43
Transaction
1 453
43
2 052
20
332
43
100
1 453
118
2 052
4
332
1 381
100
5 546
118
(in thousands of Euros)
Total
Exposure
Impairment
(in thousands of Euros)
229 597
Total
3 147
107 554
2 052
Exposure
136 413
Impairment
75 080
316 427
229 597
1 098 839
3 147
93 504
136 413
78 966
316 427
49 170
1 098 839
2 784
93 504
44 656
78 966
2 053 503
49 170
155 122
107 554
461 472
2 052
29 513
75 080
24 015
155 122
22 554
461 472
2 381
29 513
14 973
24 015
894 716
22 554
No.
Transaction
190
41
No.
224
Transaction
2 002
190
2 960
41
438
224
130
2 002
189
2 960
6
438
2 021
130
8 201
189
4
15
1
2
2 769
2 380
6
2 784
2 381
1 381
25 256
1 108
640
19 400
13 865
2 021
44 656
14 973
5 546
755 309
100 650
2 655
1 298 194
794 066
8 201
2 053 503
894 716
Market Risk represents the potential loss resulting from an adverse change in the value of a financial instrument due to fluctuations
in interest rates, foreign exchange rates, equity prices, commodity prices, volatility and credit spread.
39.4 - Market risk
39.4 - Market risk
Market risk management is integrated with the balance sheet management through the CALCO (Capital Asset and Liability
Market Risk represents the potential loss resulting from an adverse change in the value of a financial instrument due to fluctuations
Committee) structure, being this risk monitored by the Risk Committee.
in interest rates, foreign exchange rates, equity prices, commodity prices, volatility and credit spread.
Market Risk represents the potential loss resulting from an adverse change in the value of a financial
instrument due to fluctuations in interest rates, foreign exchange rates, equity prices, commodity
prices, volatility and credit spread.
Market risk management is integrated with the balance sheet management through the CALCO
(Capital Asset and Liability Committee) structure, being this risk monitored by the Risk Committee.
The main measurement of market risk is the assessment of potential losses under adverse market conditions, for which the Value at
Market risk management is integrated with the balance sheet management through the CALCO (Capital Asset and Liability
Risk (VaR) methodology is used. The Bank uses the Monte Carlo simulation in the VaR model, based on a confidence level of 99%
Committee) structure, being this risk monitored by the Risk Committee.
and an investment period of 10 days. Volatilities and correlations are historical, based on an observation period of one year. As a
complement to VaR, stress testing scenarios have been developed, which allow for the evaluation of the impact of losses potentially
The main measurement of market risk is the assessment of potential losses under adverse market conditions, for which the Value at
higher than those considered by the VaR measurement.
Risk (VaR) methodology is used. The Bank uses the Monte Carlo simulation in the VaR model, based on a confidence level of 99%
and an investment period of 10 days. Volatilities and correlations are historical, based on an observation period of one year. As a
complement to VaR, stress testing scenarios have been developed, which allow for the evaluation of the impact of losses potentially
higher than those considered by the VaR measurement.
December Annual average Maximum Minimum December Annual average Maximum Minimum
(in thousands of Euros)
Net Value
Net Value
The main measurement of market risk is the assessment of potential losses under adverse market
conditions, for which the Value at Risk (VaR) methodology is used. The Bank uses the Monte Carlo
simulation in the VaR model, based on a confidence level of 99% and an investment period of 10 days.
Volatilities and correlations are historical, based on an observation period of one year. As a complement
to VaR, stress testing scenarios have been developed, which allow for the evaluation of the impact of
losses potentially higher than those considered by the VaR measurement.
Exchange risk
Interest rate risk
Shares and commodities
Volatility
Exchange risk
Credit spread
Interest rate risk
Diversification effect
Shares and commodities
Total
Volatility
Credit spread
Diversification effect
3 464
41 240
225
422
3 464
4 146
41 240
( 7 032)
225
42 465
422
4 146
( 7 032)
novobanco has a value at risk (VaR) of approximately Euro 13,436 thousand (31 December 2020: Euro 15,781 thousand) for its
trading positions. The decrease is mainly explained by the increase in the position in derivatives to hedge interest rate risk in the
42 465
banking portfolio.
735
14 433
80
December Annual average Maximum Minimum December Annual average Maximum Minimum
37
735
1 640
14 433
( 1 144)
80
15 781
37
1 640
( 1 144)
1 966
24 522
Net Value
33
66
1 966
1 329
24 522
( 3 017)
33
24 899
66
1 329
( 3 017)
2 138
35 495
Net Value
192
139
2 138
5 051
35 495
( 5 290)
192
37 725
139
5 051
( 5 290)
6 154
70 332
378
523
6 154
12 960
70 332
( 14 746)
378
75 601
523
12 960
( 14 746)
896
14 433
183
37
896
2 652
14 433
( 2 420)
183
15 781
37
2 652
( 2 420)
807
10 628
0
0
807
579
10 628
1 422
0
13 436
0
579
1 422
2 551
31 454
3
0
2 551
719
31 454
( 4 399)
3
30 329
0
719
( 4 399)
(in thousands of Euros)
30 329
24 899
75 601
37 725
15 781
15 781
13 436
Total
novobanco has a value at risk (VaR) of approximately Euro 13,436 thousand (31 December 2020: Euro 15,781 thousand) for its
trading positions. The decrease is mainly explained by the increase in the position in derivatives to hedge interest rate risk in the
banking portfolio.
437
112
112
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
novobanco has a value at risk (VaR) of approximately Euro 13,436 thousand (31 December 2020:
Euro 15,781 thousand) for its trading positions. The decrease is mainly explained by the increase in the
position in derivatives to hedge interest rate risk in the banking portfolio.
39.4.1. Interest rate risk
39.4.1 - Interest rate risk
In accordance with the recommendations of European Banking Authority presented in the document EBA/GL/2018/02, novobanco
calculates the exposure to its balance sheet interest rate risk based on the prescribed shocks, classifying all notional amounts of
assets, liabilities and off-balance sheet captions which are sensitive to interest rate and are not part of the trading portfolio, by re-
pricing intervals.
In accordance with the recommendations of European Banking Authority presented in the document
EBA/GL/2018/02, novobanco calculates the exposure to its balance sheet interest rate risk based
on the prescribed shocks, classifying all notional amounts of assets, liabilities and off-balance sheet
captions which are sensitive to interest rate and are not part of the trading portfolio, by re-pricing
intervals.
Eligible
amounts
Not
sensitive
Up to 3
months
Loans to and deposits with banks
Loans and advances to customers
Securities
Other assets
5 790 475
22 211 085
10 238 741
399 920
Deposits from banks
Due to customers
Debt securities issued
Other liabilities
Total
Total
Balance sheet GAP (Assets - Liabilities)
Off-Balance sheet
Structural GAP
Accumulated GAP
11 493 449
26 981 348
2 540 658
257 274
-
(2 632 509)
( 4 829)
(2 637 338)
-
-
-
-
-
-
-
-
-
Eligible
amounts
Not
sensitive
Up to 3
months
Loans to and deposits with banks
Loans and advances to customers
Securities
Other assets
2 693 914
23 657 850
10 866 377
1 254 599
Deposits from banks
Due to customers
Debt securities issued
Other liabilities
Total
Total
Balance sheet GAP (Assets - Liabilities)
Off-Balance sheet
Structural GAP
Accumulated GAP
10 776 491
27 658 208
2 529 491
236 632
-
(2 728 081)
17 178
(2 710 903)
-
-
-
-
-
-
-
-
-
14 774 042
4 050 213
4 804 560
10 245 347
4 766 061
(in thousands of Euros)
31.12.2021
3 to 6
months
100 000
3 148 017
802 196
-
6 months to
1 year
1 to 5 years
More than 5
years
10 967
3 829 143
964 450
-
32 522
6 556 216
3 656 609
-
14
1 462 417
3 303 630
-
4 778 199
2 264 928
-
28 687
-
7 071 814
(3 021 602)
813 050
(2 208 552)
(6 886 609)
31.12.2020
3 to 6
months
104 150
3 260 488
313 277
598 312
321 025
3 830 371
275 000
54 587
-
4 480 983
323 577
( 99 357)
224 220
(6 662 389)
( 569)
3 571 640
700 000
55 517
-
4 326 588
5 918 758
(1 307 266)
4 611 492
(2 050 897)
292 767
1 215 353
1 565 658
-
-
3 073 778
1 692 282
(2 278 723)
( 586 441)
(2 637 338)
(in thousands of Euros)
6 months to
1 year
1 to 5 years
More than 5
years
12 089
3 081 189
708 929
-
39 456
6 809 586
4 464 016
-
-
2 552 929
3 697 564
-
5 646 973
7 215 292
1 511 857
399 920
6 102 027
16 099 055
-
118 484
-
22 319 566
(7 545 524)
2 867 467
(4 678 057)
(4 678 057)
2 538 219
7 953 658
1 682 592
656 287
12 830 756
4 276 227
3 802 207
11 313 058
6 250 493
5 852 971
14 420 502
-
114 681
-
20 388 154
(7 557 399)
2 581 791
(4 975 608)
(4 975 608)
4 004 466
2 663 097
-
25 299
-
6 692 862
(2 416 634)
1 543 874
( 872 760)
(5 848 368)
475 822
4 343 730
-
47 614
-
4 867 166
(1 064 960)
( 118 153)
(1 183 113)
(7 031 481)
217 151
6 190 846
-
49 037
-
6 457 034
4 856 024
(1 800 054)
3 055 969
(3 975 512)
226 081
40 032
2 529 491
1
-
2 795 605
3 454 888
(2 190 279)
1 264 608
(2 710 903)
Sensitivity analyzes are carried out for the interest rate risk of the banking portfolio based on the current difference in the interest rate
mismatch discounted at current rates and the discounted value of the same cash flows, through scenarios of displacement of the
parallel yield curves (displacements of +/- 200 bp) and non-parallel (short rate shock up / down, steepener / flattener shocks),
according to the outliers tests defined by the EBA.
438
As at 31 December
Exercise average
Exercise maximum
Exercise minimum
31.12.2021
(in thousands of Euros)
Parallel
Parallel
increase of
decrease of
200 pb
200 pb
Short Rate
Short Rate
Steepener
Flattener
Shock Up
Shock Down
shock
shock
75 258
8 175
75 258
( 21 605)
49 546
64 196
81 887
49 546
( 55 767)
( 59 017)
( 55 767)
( 63 163)
68 719
70 148
77 666
65 671
87 821
52 295
87 821
34 359
( 100 929)
( 44 255)
( 15 767)
( 100 929)
113
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
39.4.1. Interest rate risk
pricing intervals.
Loans to and deposits with banks
Loans and advances to customers
Securities
Other assets
Deposits from banks
Due to customers
Debt securities issued
Other liabilities
Off-Balance sheet
Structural GAP
Accumulated GAP
Loans to and deposits with banks
Loans and advances to customers
Securities
Other assets
Deposits from banks
Due to customers
Debt securities issued
Other liabilities
Total
In accordance with the recommendations of European Banking Authority presented in the document EBA/GL/2018/02, novobanco
calculates the exposure to its balance sheet interest rate risk based on the prescribed shocks, classifying all notional amounts of
assets, liabilities and off-balance sheet captions which are sensitive to interest rate and are not part of the trading portfolio, by re-
Eligible
amounts
Not
sensitive
Up to 3
months
(in thousands of Euros)
31.12.2021
3 to 6
months
100 000
3 148 017
802 196
5 646 973
7 215 292
1 511 857
399 920
6 months to
1 year
1 to 5 years
10 967
3 829 143
964 450
-
32 522
6 556 216
3 656 609
-
More than 5
years
14
1 462 417
3 303 630
Total
14 774 042
4 050 213
4 804 560
10 245 347
4 766 061
Balance sheet GAP (Assets - Liabilities)
(2 632 509)
Total
22 319 566
7 071 814
4 480 983
4 326 588
3 073 778
Eligible
amounts
Not
sensitive
Up to 3
months
6 months to
1 year
1 to 5 years
More than 5
years
Total
12 830 756
4 276 227
3 802 207
11 313 058
6 250 493
-
-
-
-
-
-
6 102 027
16 099 055
4 778 199
2 264 928
118 484
28 687
-
-
321 025
3 830 371
275 000
54 587
-
( 569)
3 571 640
700 000
55 517
-
292 767
1 215 353
1 565 658
(7 545 524)
2 867 467
(4 678 057)
(4 678 057)
(3 021 602)
813 050
(2 208 552)
(6 886 609)
323 577
( 99 357)
224 220
(6 662 389)
5 918 758
(1 307 266)
4 611 492
(2 050 897)
1 692 282
(2 278 723)
( 586 441)
(2 637 338)
(in thousands of Euros)
31.12.2020
3 to 6
months
104 150
3 260 488
313 277
598 312
4 004 466
2 663 097
-
25 299
-
6 692 862
(2 416 634)
1 543 874
( 872 760)
(5 848 368)
2 538 219
7 953 658
1 682 592
656 287
5 852 971
14 420 502
-
114 681
-
20 388 154
(7 557 399)
2 581 791
(4 975 608)
(4 975 608)
12 089
3 081 189
708 929
-
39 456
6 809 586
4 464 016
-
2 552 929
3 697 564
-
-
475 822
4 343 730
-
47 614
-
4 867 166
(1 064 960)
( 118 153)
(1 183 113)
(7 031 481)
217 151
6 190 846
-
49 037
-
6 457 034
4 856 024
(1 800 054)
3 055 969
(3 975 512)
226 081
40 032
2 529 491
1
-
2 795 605
3 454 888
(2 190 279)
1 264 608
(2 710 903)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5 790 475
22 211 085
10 238 741
399 920
11 493 449
26 981 348
2 540 658
257 274
-
( 4 829)
(2 637 338)
2 693 914
23 657 850
10 866 377
1 254 599
10 776 491
27 658 208
2 529 491
236 632
-
(2 728 081)
17 178
(2 710 903)
Balance sheet GAP (Assets - Liabilities)
Off-Balance sheet
Structural GAP
Accumulated GAP
Sensitivity analyzes are carried out for the interest rate risk of the banking portfolio based on the
current difference in the interest rate mismatch discounted at current rates and the discounted value
of the same cash flows, through scenarios of displacement of the parallel yield curves (displacements
of +/- 200 bp) and non-parallel (short rate shock up / down, steepener / flattener shocks), according
to the outliers tests defined by the EBA.
Sensitivity analyzes are carried out for the interest rate risk of the banking portfolio based on the current difference in the interest rate
mismatch discounted at current rates and the discounted value of the same cash flows, through scenarios of displacement of the
parallel yield curves (displacements of +/- 200 bp) and non-parallel (short rate shock up / down, steepener / flattener shocks),
according to the outliers tests defined by the EBA.
31.12.2021
(in thousands of Euros)
Parallel
increase of
200 pb
Parallel
decrease of
200 pb
Short Rate
Shock Up
Short Rate
Shock Down
Steepener
shock
Flattener
shock
75 258
8 175
75 258
( 21 605)
49 546
64 196
81 887
49 546
( 55 767)
( 59 017)
( 55 767)
( 63 163)
68 719
70 148
77 666
65 671
87 821
52 295
87 821
34 359
( 100 929)
( 44 255)
( 15 767)
( 100 929)
31.12.2020
(in thousands of Euros)
Parallel
increase of
200 pb
Parallel
decrease of
200 pb
Short Rate
Shock Up
Short Rate
Shock Down
Steepener
shock
Flattener
shock
( 119 060)
101 005
222 085
( 119 060)
58 714
( 14 077)
58 714
( 61 170)
( 79 332)
112 856
237 860
( 79 332)
51 919
( 17 148)
51 919
( 87 651)
( 5 075)
( 86 325)
( 5 075)
( 177 904)
113
19 167
110 212
183 559
19 167
As at 31 December
Exercise average
Exercise maximum
Exercise minimum
As at 31 December
Exercise average
Exercise maximum
Exercise minimum
39.4.2 - IBOR Reform
39.4.2 - IBOR Reform
As part of the application of Commission Regulation (EU) 2021/25, of 13 January 2021 - Reform of the reference interest rates, which
led to the transition from EONIA to € STR, in the course of 2020, the Bank proceeded to change the discount curve of their positions
in derivative financial instruments cleared in central counterparty (CCP) from EUR OIS to EUR € STR and from USD OIS to USD
SOFR. Regarding bilateral derivatives, in the course of 2021, the Bank re-negotiated several CSA agreements to change to risk free
rate curves, and in cases where no agreement was reached, the curves were changed to EUR €STR + 8.5 basis points. In accordance
with the principle of implementation of the aforementioned regulation, that no substantial changes to the original objective of risk
management or discontinuation of hedging relationships will occur, the Bank did not record significant impacts on retrospective and
prospective effectiveness, taking into account that all assets and liabilities involved in hedging relationships were subject to the same
change (hedged and hedged items). In relation to other financial instruments, taking into consideration the Bank's reduced exposure
to instruments in currency instruments, there were no relevant impacts.
or discontinuation of hedging relationships will occur, the Bank did not record significant impacts on
retrospective and prospective effectiveness, taking into account that all assets and liabilities involved
in hedging relationships were subject to the same change (hedged and hedged items). In relation to
other financial instruments, taking into consideration the Bank’s reduced exposure to instruments in
currency instruments, there were no relevant impacts.
The following table presents the average interest rates for the Bank major financial asset and liability
categories, as of 31 December 2021 and 2020, as well as the respective average balances and interest
for the exercise:
As part of the application of Commission Regulation (EU) 2021/25, of 13 January 2021 - Reform of
the reference interest rates, which led to the transition from EONIA to € STR, in the course of 2020,
the Bank proceeded to change the discount curve of their positions in derivative financial instruments
cleared in central counterparty (CCP) from EUR OIS to EUR € STR and from USD OIS to USD SOFR.
Regarding bilateral derivatives, in the course of 2021, the Bank re-negotiated several CSA agreements
to change to risk free rate curves, and in cases where no agreement was reached, the curves were
changed to EUR €STR + 8.5 basis points. In accordance with the principle of implementation of the
aforementioned regulation, that no substantial changes to the original objective of risk management
The following table presents the average interest rates for the Bank major financial asset and liability categories, as of 31 December
2021 and 2020, as well as the respective average balances and interest for the exercise:
31.12.2021
31.12.2020
Average balance of the
period
Interest of the
period
Average
interest rate
Average balance of the
period
Interest of the
period
Average
interest rate
(in thousands of Euros)
Monetary assets
Loans and advances to customers
Securities and other
4 566 715
23 162 232
11 254 711
2 653
492 762
154 879
Financial assets and differentials
38 983 658
650 294
Monetary Liabilities
Due to customers
Differential liabilities
Net interest income
11 252 385
25 988 282
712 741
( 66 125)
50 231
14 423
581 084
0.06%
2.10%
1.36%
1.65%
-0.58%
0.19%
2.00%
0.18%
1.47%
2 964 259
23 007 206
11 859 535
17 085
517 579
168 766
37 831 000
703 430
10 739 033
25 233 793
965 587
( 12 781)
69 990
9 851
567 999
0.57%
2.22%
1.40%
1.83%
-0.12%
0.27%
1.01%
0.35%
1.48%
Financial liabilities and differentials
38 983 658
69 210
37 831 000
135 431
439
114
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
31.12.2020
(in thousands of Euros)
Parallel
Parallel
increase of
decrease of
200 pb
200 pb
Short Rate
Short Rate
Steepener
Flattener
Shock Up
Shock Down
shock
shock
( 119 060)
101 005
222 085
( 119 060)
58 714
( 14 077)
58 714
( 61 170)
( 79 332)
112 856
237 860
( 79 332)
51 919
( 17 148)
51 919
( 87 651)
( 5 075)
( 86 325)
( 5 075)
( 177 904)
19 167
110 212
183 559
19 167
As at 31 December
Exercise average
Exercise maximum
Exercise minimum
39.4.2 - IBOR Reform
As part of the application of Commission Regulation (EU) 2021/25, of 13 January 2021 - Reform of the reference interest rates, which
led to the transition from EONIA to € STR, in the course of 2020, the Bank proceeded to change the discount curve of their positions
in derivative financial instruments cleared in central counterparty (CCP) from EUR OIS to EUR € STR and from USD OIS to USD
SOFR. Regarding bilateral derivatives, in the course of 2021, the Bank re-negotiated several CSA agreements to change to risk free
rate curves, and in cases where no agreement was reached, the curves were changed to EUR €STR + 8.5 basis points. In accordance
with the principle of implementation of the aforementioned regulation, that no substantial changes to the original objective of risk
management or discontinuation of hedging relationships will occur, the Bank did not record significant impacts on retrospective and
prospective effectiveness, taking into account that all assets and liabilities involved in hedging relationships were subject to the same
change (hedged and hedged items). In relation to other financial instruments, taking into consideration the Bank's reduced exposure
to instruments in currency instruments, there were no relevant impacts.
The following table presents the average interest rates for the Bank major financial asset and liability categories, as of 31 December
2021 and 2020, as well as the respective average balances and interest for the exercise:
31.12.2021
31.12.2020
Average balance of the
period
Interest of the
period
Average
interest rate
Average balance of the
period
Interest of the
period
Average
interest rate
(in thousands of Euros)
Monetary assets
Loans and advances to customers
Securities and other
4 566 715
23 162 232
11 254 711
2 653
492 762
154 879
Financial assets and differentials
38 983 658
650 294
Monetary Liabilities
Due to customers
Differential liabilities
11 252 385
25 988 282
712 741
( 66 125)
50 231
14 423
Financial liabilities and differentials
38 983 658
69 210
Net interest income
581 084
0.06%
2.10%
1.36%
1.65%
-0.58%
0.19%
2.00%
0.18%
1.47%
2 964 259
23 007 206
11 859 535
17 085
517 579
168 766
37 831 000
703 430
10 739 033
25 233 793
965 587
( 12 781)
69 990
9 851
37 831 000
135 431
567 999
0.57%
2.22%
1.40%
1.83%
-0.12%
0.27%
1.01%
0.35%
1.48%
39.4.3 - Exchange rate risk
39.4.3 - Exchange rate risk
Regarding foreign exchange risk, the breakdown of assets and liabilities, by currency, as at 31 December
2021 and 2020, is analyzed as follows:
Regarding foreign exchange risk, the breakdown of assets and liabilities, by currency, as at 31 December 2021 and 2020, is analyzed
as follows:
31.12.2021
31.12.2020
(in thousands of Euros)
Spot Positions
Term positions Other elements
Net Position
Spot Positions
Term positions Other elements
Net Position
USD UNITED STATES DOLLAR
GBP GREAT BRITISH POUND
BRL BRAZILIAN REAL
DKK DANISH KRONE
JPY JAPANESE YEN
CHF SWISS FRANC
SEK SWEDISH KRONE
NOK NORWEGIAN KRONE
CAD CANADIAN DOLLAR
ZAR SOUTH AFRICAN RAND
AUD AUSTRALIAN DOLLAR
VEB VENEZUELAN BOLIVAR
MOP MACAO PATACA
MAD MOROCCAN DIRHAN
MXN MEXICAN PESO
AOA ANGOLAN KWANZA
( 177 489)
( 42 549)
783
( 6 542)
( 1 353)
( 13 303)
19 751
54 362
( 18 620)
1 128
10 216
2
2 256
( 2 996)
( 14)
( 1)
PLN POLISH ZLOTY 36 099
CZK CZECH KORUNA
DZD ALGERIAN DINAR
16 208
5 507
169 546
47 842
-
6 885
2 310
16 281
( 19 077)
( 54 035)
21 502
( 1 207)
( 9 990)
-
-
2 936
9
-
( 35 643)
( 17 041)
-
CNY YUAN REN-MIN-BI
51 351
( 50 975)
OTHERS
( 3 337)
2 334
( 15)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
( 68 541)
81 677
( 15)
Note: assets / (liabilities)
39.5 - Liquidity risk
( 7 958)
5 293
( 752 913)
( 67 061)
779 774
69 964
( 72 362)
9 804
99
( 2 067)
-
-
-
2 067
10 903
( 19 334)
( 46 086)
3 518
( 230)
( 4 615)
-
-
2 984
373
-
( 29 125)
( 9 979)
-
( 9 487)
( 19 344)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26 960
836
1 082
192
1 919
2 246
189
637
2 233
( 270)
387
1
2 124
( 97)
175
8 781
( 855)
114
( 406)
4 447
( 68)
( 27 560)
73 444
( 9 612)
( 148)
( 8 657)
19 523
46 723
( 1 285)
( 40)
5 002
1
2 124
( 3 081)
( 198)
8 781
28 270
9 573
4 447
9 419
( 8 216)
( 643 904)
666 758
99
22 953
783
343
957
2 978
674
327
2 882
( 79)
226
2
2 256
( 60)
( 5)
( 1)
456
( 833)
5 507
376
( 1 003)
13 121
Liquidity risk is the current or future risk that arises from an institution's inability to meet its liabilities as they mature, without incurring
substantial losses.
Liquidity risk can be divided into two types:
value;
Liquidity of assets (market liquidity risk) - consists in the impossibility of selling a certain type of asset due to the lack of
liquidity in the market, which translates into the widening of the bid / offer spread or the application of a haircut to the market
Financing (funding liquidity risk) - consists of the impossibility of financing the assets in the market and / or refinancing the
debt that is maturing, in the terms and in the desired currency. This impossibility can be reflected through a strong increase
in the cost of financing or the requirement for collateral to obtain funds. The difficulty of (re) financing can lead to the sale of
assets, even if incurring significant losses. The risk of (re) financing must be minimized through an adequate diversification
of funding sources and maturity terms.
Banks are subject to liquidity risk due to their maturity transformation business (long-term lenders and short-term depositors), so
prudent liquidity risk management is therefore crucial.
As of 31 December 2021, the value of the asset portfolio eligible as collateral for rediscounting operations with the ECB, after haircuts,
amounted to Euro 16.5 billion (31 December 2020: Euro 16.6 billion). This amount includes all the exposure to Portuguese sovereign
debt, in the total amount of approximately Euro 2.5 billion.
During 2021, gross financing from the ECB increased by 974 million euros to a total of 8.0 billion euros (2020: increase in the amount
of Euro 910 million for a total of Euro 7,0 billion).
The liquidity of novobanco is managed in a centralized manner, in the Headquarters, for the prudential consolidation perimeter, and
the analysis and decision making made based on the mismatch reports, which allow, not only to identify negative mismatches but
also to make a dynamic hedging of those mismatches. As of 31 December 2021, and 2020, the calculation of the liquid contractual
deficit and the counterbalancing capacity was performed following the ITS (Implementing Technical Standards) rules:
115
440
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
39.5 - Liquidity risk
Liquidity risk is the current or future risk that arises from an institution’s inability to meet its liabilities as
they mature, without incurring substantial losses.
Liquidity risk can be divided into two types:
• Liquidity of assets (market liquidity risk) - consists in the impossibility of selling a certain type of
asset due to the lack of liquidity in the market, which translates into the widening of the bid / offer
spread or the application of a haircut to the market value;
• Financing (funding liquidity risk) - consists of the impossibility of financing the assets in the
market and / or refinancing the debt that is maturing, in the terms and in the desired currency. This
impossibility can be reflected through a strong increase in the cost of financing or the requirement
for collateral to obtain funds. The difficulty of (re) financing can lead to the sale of assets, even
if incurring significant losses. The risk of (re) financing must be minimized through an adequate
diversification of funding sources and maturity terms.
Banks are subject to liquidity risk due to their maturity transformation business (long-term lenders and
short-term depositors), so prudent liquidity risk management is therefore crucial.
As of 31 December 2021, the value of the asset portfolio eligible as collateral for rediscounting operations
with the ECB, after haircuts, amounted to Euro 16.5 billion (31 December 2020: Euro 16.6 billion). This
amount includes all the exposure to Portuguese sovereign debt, in the total amount of approximately
Euro 2.5 billion.
During 2021, gross financing from the ECB increased by 974 million euros to a total of 8.0 billion euros
(2020: increase in the amount of Euro 910 million for a total of Euro 7,0 billion).
The liquidity of novobanco is managed in a centralized manner, in the Headquarters, for the prudential
consolidation perimeter, and the analysis and decision making made based on the mismatch reports,
which allow, not only to identify negative mismatches but also to make a dynamic hedging of those
mismatches. As of 31 December 2021, and 2020, the calculation of the liquid contractual deficit and
the counterbalancing capacity was performed following the ITS (Implementing Technical Standards)
rules:
31.12.2021
(in thousands of Euros)
Total
until 7 days
from 7 days to 1
month
from 1 to 3
months
from 3 to 6
months
from 6m to 1
year
higher than1
year
OUTPUTS
Liabilities arising from securities issued (if not treated as retail deposits)
710 947
Liabilities arising from secured loan operations and capital market operations
9 948 704
-
-
-
-
626 980
52 669
-
-
22 054
688 893
2 514 555
6 754 500
Behavioral exits resulting from deposits
29 286 247
459 384
316 628
213 461
216 116
575 321
27 505 337
Foreign exchange swaps and derivatives
520 853
5 940
45 222
376 528
43 099
25 734
24 330
Other outputs
Total Exits
Entries
478 049
-
-
-
11 515
33 814
432 720
40 944 800
465 324
988 830
642 658
270 730
3 171 478
35 405 780
Guaranteed loan operations and operations associated with the capital market
172 139
-
-
-
-
40 991
131 148
Behavioral inflows resulting from loans and advances
30 327 148
5 180 565
52 796
175 110
316 874
420 764
24 181 039
Foreign exchange swaps and derivatives
675 752
7 826
40 850
376 467
61 089
39 413
150 107
Own portfolio securities to mature and Other entries
11 752 499
148 242
130 897
503 810
707 762
607 767
9 654 021
Total Entries
Net contractual deficit
42 927 538
5 336 633
224 543
1 055 387
1 085 725
1 108 935
34 116 315
1 982 737
4 871 309
( 764 288)
412 728
814 995
(2 062 541)
(1 289 466)
Accumulated net contractual deficit
-
4 871 309
4 107 021
4 519 749
5 334 744
3 272 203
1 982 737
REBALANCE CAPACITY
Coins and banknotes
Central bank mobilisable reserves
Stock Inicial
até 7 dias
de 7 dias até 1
mês
de 1 a 3 meses de 3 a 6 meses de 6m a 1 ano
superior a
1 ano
144 220
4 999 674
(4 999 674)
Marketable and non-marketable assets eligible for central banks
7 178 648
-
432 159
( 326 174)
( 537 314)
( 451 505)
(6 154 300)
Authorized and unused facilities received
Net change in rebalancing capacity
Accumulated rebalancing capacity
-
-
( 42 401)
( 73 498)
( 226 102)
( 281 873)
1 314 154
( 690 281)
(5 042 075)
358 661
( 552 276)
( 819 187)
862 649
(6 844 581)
12 322 542
7 280 467
7 639 128
7 086 852
6 267 665
7 130 314
285 733
441
116
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
31.12.2020
(in thousands of Euros)
Total
until 7 days
from 7 days to 1
month
from 1 to 3
months
from 3 to 6
months
from 6m to 1
year
higher than1
year
OUTPUTS
Liabilities arising from securities issued (if not treated as retail deposits)
105 505
-
-
-
-
-
105 505
Liabilities arising from secured loan operations and capital market operations
9 161 995
68 874
106 104
53 504
150 000
264 458
8 519 055
Behavioral exits resulting from deposits
30 099 947
417 595
353 268
311 225
236 880
583 946
28 197 033
Foreign exchange swaps and derivatives
581 986
110 144
144 781
240 424
32 623
34 865
19 149
Other outputs
Total Exits
Entries
550 075
-
-
140 000
11 515
-
398 560
40 499 508
596 613
604 153
745 153
431 018
883 269
37 239 302
Guaranteed loan operations and operations associated with the capital market
203 306
60 917
-
-
-
-
142 389
Behavioral inflows resulting from loans and advances
26 056 009
73 680
53 648
189 806
319 315
435 854
24 983 706
Foreign exchange swaps and derivatives
854 599
103 393
145 076
243 899
48 523
71 288
242 420
Own portfolio securities to mature and Other entries
13 351 148
103 580
154 527
376 513
802 895
898 664
11 014 969
Total Entries
Net contractual deficit
40 465 062
341 570
353 251
810 218
1 170 733
1 405 806
36 383 484
( 34 446)
( 255 043)
( 250 902)
65 065
739 715
522 537
( 855 818)
Accumulated net contractual deficit
-
( 255 043)
( 505 945)
( 440 880)
298 835
821 372
( 34 446)
REBALANCE CAPACITY
Coins and banknotes
Central bank mobilisable reserves
Stock Inicial
até 7 dias
de 7 dias até 1
mês
de 1 a 3 meses de 3 a 6 meses de 6m a 1 ano
superior a
1 ano
142 325
2 030 915
(2 030 915)
Marketable and non-marketable assets eligible for central banks
7 945 203
67 249
106 994
( 123 762)
( 60 112)
( 587 185)
(7 208 003)
Authorized and unused facilities received
Net change in rebalancing capacity
Accumulated rebalancing capacity
-
-
( 29 275)
( 55 212)
( 199 759)
( 350 461)
( 288 680)
923 388
(1 992 941)
51 782
( 323 521)
( 410 573)
( 875 865)
(6 284 615)
10 118 443
8 125 502
8 177 284
7 853 763
7 443 190
6 567 325
282 710
As of 31 December 2020, there was an accumulated 1-year net contractual surplus of Euro 821 million (considering in Entries the
cash in Central Banks, deducted from the cash reserve requirements), having shifted at the end of 2021 to an accumulated 1-year
net contractual deficit of Euro 3,272 million.
As of 31 December 2020, there was an accumulated 1-year net contractual surplus of Euro 821 million
(considering in Entries the cash in Central Banks, deducted from the cash reserve requirements), having
shifted at the end of 2021 to an accumulated 1-year net contractual deficit of Euro 3,272 million.
The 1-year counterbalancing capacity the end of 2021 was Euro 7,130 million, Euro 563 million more than the figure recorded at the
end of 2020 (Euro 6,567 million).
The 1-year counterbalancing capacity the end of 2021 was Euro 7,130 million, Euro 563 million more
than the figure recorded at the end of 2020 (Euro 6,567 million).
In order to anticipate possible negative impacts, internal liquidity stress scenarios representative of the types of crisis that may occur
are carried out, based on idiosyncratic scenarios (characterized by a loss of confidence in the Bank), and market scenarios.
In addition, and given the importance of liquidity risk management, the regulatory legislation includes a
liquidity coverage ratio (Liquidity Coverage Ratio - LCR) and a stable financing ratio (Net Stable Funding
Ratio - NSFR). The LCR aims to promote banks’ resilience to short-term liquidity risk, ensuring that they
hold high-quality liquid assets, sufficient to survive a severe stress scenario, for a period of 30 days,
while the NSFR aims to ensure that Banks maintain stable financing for their assets and off-balance
sheet operations, for a period of one year.
In order to anticipate possible negative impacts, internal liquidity stress scenarios representative of the
types of crisis that may occur are carried out, based on idiosyncratic scenarios (characterized by a loss
of confidence in the Bank), and market scenarios.
In addition, and given the importance of liquidity risk management, the regulatory legislation includes a liquidity coverage ratio
In accordance with current regulatory legislation, the Bank is obliged to comply with a minimum limit
(Liquidity Coverage Ratio - LCR) and a stable financing ratio (Net Stable Funding Ratio - NSFR). The LCR aims to promote banks'
of 100% in the LCR. The Bank continues to follow regulatory changes in order to comply with all
resilience to short-term liquidity risk, ensuring that they hold high-quality liquid assets, sufficient to survive a severe stress scenario,
obligations, namely the implementation of the NSFR and its limit.
for a period of 30 days, while the NSFR aims to ensure that Banks maintain stable financing for their assets and off-balance sheet
operations, for a period of one year.
In accordance with current regulatory legislation, the Bank is obliged to comply with a minimum limit of 100% in the LCR. The Bank
continues to follow regulatory changes in order to comply with all obligations, namely the implementation of the NSFR and its limit.
39.6 - Operational risk
Operational risk generally translates into the probability of the occurrence of events with negative impacts, in the results or in the
capital, resulting from the inadequacy or deficiency of procedures and information systems, the behavior of people or motivated by
external events, including legal risks. Thus, operational risk is understood as the calculation of the following risks: operational,
information systems, compliance and reputation.
For the management of operational risk, a system was developed and implemented to ensure the uniformity, systematization and
recurrence of the activities for the identification, monitoring, control and mitigation of this risk. This system is supported by an
organizational structure, integrated in the Global Risk Department exclusively dedicated to this task, as well as by Operational Risk
Management Representatives designated by each of the departments, branches and subsidiaries considered relevant, which are
responsible for complying with the procedures. and the day-to-day management of this Risk in its areas of competence.
442
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
39.6 - Operational risk
Operational risk generally translates into the probability of the occurrence of events with negative
impacts, in the results or in the capital, resulting from the inadequacy or deficiency of procedures and
information systems, the behavior of people or motivated by external events, including legal risks.
Thus, operational risk is understood as the calculation of the following risks: operational, information
systems, compliance and reputation.
For the management of operational risk, a system was developed and implemented to ensure the
uniformity, systematization and recurrence of the activities for the identification, monitoring, control
and mitigation of this risk. This system is supported by an organizational structure, integrated in the
Global Risk Department exclusively dedicated to this task, as well as by Operational Risk Management
Representatives designated by each of the departments, branches and subsidiaries considered
relevant, which are responsible for complying with the procedures. and the day-to-day management
of this Risk in its areas of competence.
The capital ratios of novobanco are calculated based on the rules defined in Directive 2013/36/EU and
Regulation (EU) no. 575/2013 (CRR) that define the criteria for the access to the credit institution and
investment company activity and determine the prudential requirements to be observed by those
same entities, in particular to the calculation of the ratios mentioned above.
novobanco is authorized to apply the Internal Ratings-Based Approach (IRB) for the calculation of
risk weighted assets by credit risk. In particular, the IRB method is applied to the exposure classes
of institutions, corporate and retail of novobanco. The equity’ risk classes, the positions taken in the
form of securitization, the positions taken in the form of participation units in investment funds, and
the elements that are not credit obligations are always handled by the IRB method regardless of the
Bank entities in which the respective exposures are recorded. The standard method is used in the
determination of risk weighted assets by market and operational risks.
The regulatory capital components considered in the determination of solvency ratios are divided into
own funds of level 1 (or Common Equity Tier I or CET I), additional own funds of level 1 (additional Tier I)
which combined with the CET I constitute the own funds of level I (Tier I), and own funds of level 2 (or
Tier II) which added to the Tier I represent the total own funds.
39.7 - Capital Management and Solvency Ratio
The total own funds of novobanco are composed by elements of CET I and Tier II.
The main objective of the Bank’s capital management is to ensure compliance with the Bank’s strategic
objectives in terms of capital adequacy, respecting and enforcing the requirements for calculating
risk-weighted assets and own funds and ensuring compliance with the levels of solvency and leverage
defined by the supervisory entities, in particular by the European Central Bank (ECB) – the entity
directly responsible for the supervision of novobanco - and by the Bank of Portugal, and internally
stipulated risk appetite for capital metrics.
The definition of the strategy for capital adequacy management rests with the Executive Board of
Directors and is integrated in the global definition of the novobanco objectives.
The summary of own funds, risk weighted assets and capital ratios capital of novobanco as of 31
December 2021 and 2020 are presented in the following table:
443
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes The summary of own funds, risk weighted assets and capital ratios capital of novobanco as of 31 December 2021 and 2020 are
presented in the following table:
Realised ordinary share capital, issue premiums and own shares
Reserves and Retained earnings
Net income for the year attributable to shareholders of the Bank
A - Equity (prudential perspective)
Adjustments of additional valuation
Transitional period to IFRS9
Goodwill and other intangibles
Insufficiency of provisions given the expected losses
Deferred tax assets and shareholdings in financial companies
Others (2)
B - Regulatory adjustments to equity
C - Own principal funds level 1 - CET I (A+B)
D - Additional own funds Level 1 - Additional Tier 1
E - Level 1 own funds - Tier I (C+D)
Subordinated liabilities elegeible for Tier II
Other elements elegible for Tier II
Regulatory adjustments for Tier II
F - Level 2 own funds - Tier II
G - Eligible own funds (E+F)
Credit risk
Market risk
Operational risk
H - Risk Weighted Assets
Solvability ratio
CET I ratio
Tier I ratio
Solvability ratio
Leverage ratio(3)
31.12.2021 (4)
(in millions of Euros)
31.12.2020 (1)
6 055
( 3 481)
226
2 799
( 10)
229
( 68)
( 9)
( 198)
( 321)
( 377)
5 900
( 1 773)
( 1 374)
2 753
( 12)
349
( 48)
( 60)
( 98)
( 267)
( 137)
2 422
2 616
-
-
2 422
2 616
399
108
-
506
399
115
-
514
2 928
3 130
22 032
1 205
1 620
24 857
9.7%
9.7%
11.8%
5.2%
24 246
1 277
1 539
27 063
9.7%
9.7%
11.6%
5.4%
(C/H)
(E/H)
(G/H)
(1) Values restated with reference to the year 2020.
(2) Since the end of 2020 it encompasses the adjustments to the CCA receivable, reflected at the level of reserves, and not received from the Resolution Fund.
(3) The leverage ratio results from dividing Tier 1 by the exposure measure determined under the CRR.
(4) Provisional values
NOTE 40 –INSURANCE AND REINSURANCE
MEDIATION SERVICES
As at 31 December 2021 and 2020, the compensation arising from the provision of insurance or
reinsurance mediation services has the following composition:
NOTE 40 –INSURANCE AND REINSURANCE MEDIATION SERVICES
As at 31 December 2021 and 2020, the compensation arising from the provision of insurance or reinsurance mediation services has
the following composition:
Life Branch
Unit Link and other life commissions
Credit protection insurance (life insurance)
Traditional products
Non-Life Branch
Private insurance
Corporate Insurance
Credit protection insurance (non-life part)
Note: the yields shown are net of periodization
(in thousands of Euros)
31.12.2021
31.12.2020
1 828
823
14 529
17 180
7 442
178
2 249
9 869
27 049
1 832
655
15 176
17 663
6 677
193
905
7 775
25 438
119
444
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
The summary of own funds, risk weighted assets and capital ratios capital of novobanco as of 31 December 2021 and 2020 are
presented in the following table:
Realised ordinary share capital, issue premiums and own shares
Reserves and Retained earnings
Net income for the year attributable to shareholders of the Bank
A - Equity (prudential perspective)
Adjustments of additional valuation
Transitional period to IFRS9
Goodwill and other intangibles
Insufficiency of provisions given the expected losses
Deferred tax assets and shareholdings in financial companies
Others (2)
B - Regulatory adjustments to equity
C - Own principal funds level 1 - CET I (A+B)
D - Additional own funds Level 1 - Additional Tier 1
E - Level 1 own funds - Tier I (C+D)
Subordinated liabilities elegeible for Tier II
Other elements elegible for Tier II
Regulatory adjustments for Tier II
F - Level 2 own funds - Tier II
G - Eligible own funds (E+F)
Credit risk
Market risk
Operational risk
H - Risk Weighted Assets
Solvability ratio
CET I ratio
Tier I ratio
Solvability ratio
Leverage ratio(3)
(4) Provisional values
(in millions of Euros)
31.12.2021 (4)
31.12.2020 (1)
6 055
( 3 481)
226
2 799
( 10)
229
( 68)
( 9)
( 198)
( 321)
( 377)
399
108
-
506
22 032
1 205
1 620
24 857
9.7%
9.7%
11.8%
5.2%
5 900
( 1 773)
( 1 374)
2 753
( 12)
349
( 48)
( 60)
( 98)
( 267)
( 137)
399
115
-
514
24 246
1 277
1 539
27 063
9.7%
9.7%
11.6%
5.4%
2 422
2 616
-
-
2 422
2 616
2 928
3 130
(C/H)
(E/H)
(G/H)
(1) Values restated with reference to the year 2020.
(2) Since the end of 2020 it encompasses the adjustments to the CCA receivable, reflected at the level of reserves, and not received from the Resolution Fund.
(3) The leverage ratio results from dividing Tier 1 by the exposure measure determined under the CRR.
NOTE 40 –INSURANCE AND REINSURANCE MEDIATION SERVICES
As at 31 December 2021 and 2020, the compensation arising from the provision of insurance or reinsurance mediation services has
the following composition:
Life Branch
Unit Link and other life commissions
Credit protection insurance (life insurance)
Traditional products
Non-Life Branch
Private insurance
Corporate Insurance
Credit protection insurance (non-life part)
Note: the yields shown are net of periodization
(in thousands of Euros)
31.12.2021
31.12.2020
1 828
823
14 529
17 180
7 442
178
2 249
9 869
27 049
1 832
655
15 176
17 663
6 677
193
905
7 775
25 438
119
The Bank does not collect insurance premiums on behalf of the Insurers, nor does it handle funds related
to insurance contracts. Therefore, there are no other assets, liabilities, income or charges to be reported
relating to the insurance mediation activity carried out by the Bank, other than those already disclosed.
The Bank does not collect insurance premiums on behalf of the Insurers, nor does it handle funds related to insurance contracts.
Therefore, there are no other assets, liabilities, income or charges to be reported relating to the insurance mediation activity carried
out by the Bank, other than those already disclosed.
NOTE 41 – SUBSEQUENT EVENTS
As provided for in the agreements between the Resolution Fund and the shareholder Lone Star, on
February 24, 2022, the Resolution Fund transferred ownership of shares to Nani Holdings as a result of
the capital increase by conversion of the conversion rights so that Nani Holdings’ shareholding in the
novobanco would remain at 75%, and the Resolution Fund’s shareholding was diluted to 23.44%.
NOTE 41 – SUBSEQUENT EVENTS
As provided for in the agreements between the Resolution Fund and the shareholder Lone Star, on February 24, 2022, the Resolution
Fund transferred ownership of shares to Nani Holdings as a result of the capital increase by conversion of the conversion rights so
that Nani Holdings' shareholding in the novobanco would remain at 75%, and the Resolution Fund's shareholding was diluted to
23.44%.
On February 24, 2022, the Russian Federation began a military operation on the territory of Ukraine, which triggered a war that
currently involves three countries (Russia, Ukraine and Belarus). In response various sanctions were approved with the aim of
impacting on the Russian economy, and also that of Belarus, by a group of countries, including NATO countries, the European Union
and others. There is a possibility that novobanco could be impacted by losses in the assets exposed to those countries as a result
of those sanctions, as well as the destruction that is taking place in Ukraine as a result of the war. The exposure of novobanco as at
31 December 2021, by type of asset and country is presented as follows:
On February 24, 2022, the Russian Federation began a military operation on the territory of Ukraine,
which triggered a war that currently involves three countries (Russia, Ukraine and Belarus). In response
various sanctions were approved with the aim of impacting on the Russian economy, and also that of
Belarus, by a group of countries, including NATO countries, the European Union and others. There is a
possibility that novobanco could be impacted by losses in the assets exposed to those countries as
a result of those sanctions, as well as the destruction that is taking place in Ukraine as a result of the
war. The exposure of novobanco as at 31 December 2021, by type of asset and country is presented as
follows:
Russian Federation
Belarus
Ukraine
Total
31.12.2021
(in thousands of Euros)
Loans and advances to customers
Securities
Bonds recorded at fair value through other comprehensive income
Bonds recorded at amortised cost
Total Assets
5 049
43 140
22 744
20 396
48 189
209
938
-
-
-
-
-
-
209
938
6196
43 140
22 744
20 396
49 336
445
120
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes
Annex
446
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Ernst & Young
Audit & Associados - SROC, S.A.
Avenida da República, 90-6º
1600-206 Lisboa
Portugal
Tel: +351 217 912 000
Fax: +351 217 957 586
www.ey.com
(Translation from the original document in the Portuguese language. The opinion on European Single Electronic
Format is only applicable in the Portuguese Version. In case of doubt, the Portuguese version prevails)
Statutory and Auditor’s Report
REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
Opinion
We have audited the accompanying consolidated financial statements of Novo Banco S.A. (the Group), which
comprise the Consolidated Balance Sheet as at 31 December 2021 (showing a total of 44,618,515 thousand
euros and a total equity of 3,149,471 thousand euros, including a net profit for the year of 184,504 thousand
euros), and the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the
Consolidated Statement of Changes in Equity and the Consolidated Cash Flow Statement for the year then ended,
and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements give a true and fair view, in all material
respects, of the consolidated financial position of Novo Banco, S.A. as at 31 December 2021, and of its financial
performance and its consolidated cash flows for the year then ended in accordance with International Financial
Reporting Standards as endorsed by the European Union.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) and other technical and
ethical standards and guidelines as issued by the Institute of Statutory Auditors. Our responsibilities under those
standards are further described in the “Auditor’s responsibilities for the audit of the consolidated financial
statements” section below. We are independent of the entities comprising the Group in accordance with the law
and we have fulfilled other ethical requirements in accordance with the Institute of Statutory Auditors´ code of
ethics.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
The key audit matters in the current year audit are the following:
1.
Impairment for loans and advances to customers
Description of the most significant assessed
risks of material misstatement
Summary of our response to the most significant assessed
risks of material misstatement
The caption Loans and advances to customers
includes an accumulated impairment amount of
1,247,917 thousand of euros ("K€"), with an
impairment loss of 149,375 K€ recorded in the
period on Impairment or reversal of impairment on
financial assets not measured at fair value through
profit or loss. The details of the impairment for
loans and advances to customers, the related
accounting policies, methodologies, definitions and
assumptions are disclosed in the notes to the
consolidated financial statements (Notes 7.16, 8.1,
20, 24 and 44.3).
Our audit approach included the execution of the following
procedures:
► obtaining the understanding, evaluating the design and
testing the operational effectiveness of the existing
internal control procedures in the process of quantification
of impairment losses for loans and advances to customers;
► performing analytical procedures on the evolution of the
balance of the impairment for loans and advances to
customers, comparing it with last year and with the
expectations considering the changes in the loan portfolio;
Sociedade Anónima - Capital Social 1.335.000 euros - Inscrição n.º 178 na Ordem dos Revisores Oficiais de Contas - Inscrição N.º 20161480 na Comissão do Mercado de Valores Mobiliários
Contribuinte N.º 505 988 283 - C. R. Comercial de Lisboa sob o mesmo número
A member firm of Ernst & Young Global Limited
Statutory and Auditor’s Report
(Translation from the original document in Portuguese language
In case of doubt, the Portuguese version prevails)
31 December 2021
Description of the most significant assessed
risks of material misstatement
Summary of our response to the most significant assessed
risks of material misstatement
In order to calculate this estimate on the
impairment loss of the loans and advances to
customers, management made judgments such as
the business model assessment, the evaluation of
significant increase in credit risk, the classification
as default, the definition of groups of financial
assets with similar credit risk characteristics and the
use of models and assumptions. For relevant
exposures on an individual approach, the
impairment is determined based on the judgment
from Group specialists on the evaluation of credit
risk.
In addition to the complexity of the models, its use
requires the treatment of a significant volume of
data, which raises issues on its quality and
availability.
The effects of the Covid-19 pandemic may not be
completely resolved nor fully martialized, with their
full impact still uncertain. As so, the impairment for
loans and advances to customers has to take into
consideration an eventual decrease in the credit
quality of the assets in the event of the risk
materializing.
Given the degree of subjectivity and complexity
involved, the use of alternative approaches, models
or assumptions may have a material impact on the
value of the estimated impairment, which makes we
consider this topic as key auditing matter.
► selecting a sample of customers individually assessed for
impairment to evaluate the assumptions used by
management in quantifying impairment. This analysis
included the information containing business models, the
financial situation of the debtors and the collateral
appraisal reports. Inquiring of Group experts in order to
obtain an understanding of the recovery strategy defined
and the assumptions used;
► analyzing the impacts estimated by the Group to reflect the
end of the moratoria and the possible emergence of
defaults in this population of debtors;
► analyzing the documents formalizing the relevant sale
operations of loans and advances to customers and
assessed the impact in the financial statements;
► obtaining the understanding and evaluating the design of
the model used to calculate the expected loss, testing the
calculation, comparing the information used in the model
with the source information, through the reconciliations
prepared by the Group staff, evaluating the assumptions
used to fill gaps in data, comparing the parameters used
with the results of the estimation models and comparing
the results with the values in the financial statements;
► evaluating the reasonableness of the parameters used in
the calculation of impairment, highlighting the following
procedures:
i) understanding the methodology formalized and
adopted by management and comparing with the one
effectively used;
ii) evaluating the changes to models used by the Group to
determine the parameters used in the impairment
calculation;
iii) on a sample basis, comparing the data used in the
calculation of the risk parameters with source
information, including testing the stage classification;
iv) inquiries to management’s experts responsible for
models and inspection of reports from internal audit
and regulators; and
v)
inspection of the reports with the results of the
operational assessment of the model (back-testing);
► testing the reasonableness of the overlays, in particular
the ones to respond to the additional judgmental areas
resulting from the end of the moratoria and assessing the
governance associated with these overlays;
► reading the minutes of the Credit Impairment Committees
and of the correspondence with the Resolution Fund; and
► analyzing the disclosures included in the explanatory notes
to the consolidated financial statements, based on the
requirements of international financial reporting standards
and accounting records.
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(Translation from the original document in Portuguese language
In case of doubt, the Portuguese version prevails)
31 December 2021
Statutory and Auditor’s Report
(Translation from the original document in Portuguese language
In case of doubt, the Portuguese version prevails)
31 December 2021
2. Valuation of restructuring funds
Description of the most significant assessed
risks of material misstatement
Summary of our response to the most significant assessed
risks of material misstatement
As disclosed in the Notes to the consolidated
financial statements (Note 24), on 31 December
2021, the Group held financial assets mandatorily at
fair value through profit or loss in the amount of
799,592 K€, of which €427,886 K€ and 316,746
K€ refer to, respectively, shares and other securities
with variable income.
Part of these financial assets, in the amount of
586,450 K€, is measured at fair value using
valuation methodologies that include parameters
not observable in the market (level 3) and includes
the participation of the Group in restructuring funds
(note 42). The valuation of these financial
instruments is an estimation of fair value performed
by management which uses internal models and
parameters not observable in the market.
During 2020, the management, with the assistance
of external experts, performed an independent
valuation of these financial instruments, which was
reviewed in 2021 based on observed market
evolution on similar markets.
Management considers that this reviewed valuation
corresponds to the best estimate of fair value as of
31 December 2021.
The consideration of this issue as a key audit matter
was based on its materiality for the financial
statements and the fact that the use of different
valuation techniques or assumptions could lead to
different estimates of fair value.
Our audit approach included the execution of the following
procedures:
► obtaining the understanding of the existing internal control
procedures on the valuation of financial instruments
process;
► performing analytical procedures on the evolution of the
value of these financial instruments, comparing the values
with last year and with the expectations formed, which
included understanding the variations occurred. Comparing
with the valuation of other market participants as disclosed
in public available information;
► analyzing the proposals to transact these assets and
comparing with the book value;
► analyzing the financial statements of the funds and testing
the evolution comparing with the values considered by the
Group;
► testing the review of value performed and analyzing the
assumptions used; and
► analyzing the disclosures included in the explanatory notes
to the consolidated financial statements based on the
requirements of international financial reporting standards
and in the accounting records.
3. Measurement of real estate obtained through credit foreclosure
Description of the most significant assessed
risks of material misstatement
Summary of our response to the most significant assessed
risks of material misstatement
The captions Investment properties and Other
assets, include real estate assets of 625,187 K€ and
198,628 K€, respectively. The accounting policies
and the details of these assets are disclosed in the
notes to the financial statements (notes 7.18, 7.19,
8.6, 28, 31 and 42).
As disclosed in note 7.18 to the consolidated
financial statements, the Other assets include real
estate that were essentially obtained by credit
foreclosure and for which the Group has
implemented a plan pursuant to its sale. These real
estate assets are valued at the lower of net book
value and the fair value less cost to sell. The fair
value is based on appraisals prepared by experts
hired by management.
Our audit approach included the execution of the following
procedures:
► obtaining the understanding of the existing internal control
procedures in the process of valuation of the real estate
assets received by credit recovery;
► performing analytical procedures on the value of the
assets included in the Investment properties and Other
assets, compared with last year and with the expectation
formed, which include the understanding of the variations
that have occurred and identification of changes in the
assumptions and methodologies;
► for a sample of real estate assets, testing the
reasonableness of the methodologies and assumptions
used by management’s external experts registered in
CMVM. For these assets, inspection of the eventual
Description of the most significant assessed
risks of material misstatement
Summary of our response to the most significant assessed
risks of material misstatement
The notes to the consolidated financial statements
(note 28) disclose the detail and the movement of
investment properties, which are held by investment
funds and which are rented to third parties for
obtaining income or held to generate capital gains.
The real estate assets in this category are valued at
fair value which is calculated by experts registered
at CMVM contracted by the management.
The fair value results from an estimation process by
the management that relies on judgments and
assumptions and is embodied in an evaluation
carried out by contracted independent experts. The
assumptions considered include the best use that
can be given to the asset, what could be considered
as a comparable transaction or the potential yield
that can be obtained.
The consideration of this topic as a key audit matter
is based on its materiality to the financial
statements and the fact that the use of different
valuation techniques or assumptions could lead to
different estimates of fair value.
promissory sale contracts and the certificate of land
register;
► inspecting the real estate sale contracts and testing the
derecognition requirements and the calculation of gains
and losses recorded;
► analyzing the counterparties of the most significant sales
in order to assess eventual constraints to an arm’s length
transaction;
► for the most significant transactions with real estate assets
in the scope of the contingent capital agreement, obtaining
the Resolution Fund approvals;
► inquiries to the management experts on the assumptions
used for a sample of assets and read the minutes of the
executive board.
► Inquiring the management about potential sale operations
and, when applicable, examining the offers received on the
assets and comparing with the fair value calculated by the
management; and
► analyzing the disclosures included in the explanatory notes
to the consolidated financial statements, based on the
requirements of international financial reporting standards
and accounting records.
4. Provisions and disclosure of contingent liabilities
Description of the most significant assessed
risks of material misstatement
Summary of our response to the most significant assessed
risks of material misstatement
As disclosed in note 34 to the consolidated financial
statements, there is a contingency amounting to
115,800 K€ for which a provision was registered,
additionally, the notes to the consolidated financial
statements disclose the contingent liabilities (Note
38) that may represent a possible obligation to the
Group resulting from past events. The occurrence of
these obligations is dependent on one or more
future events that are not entirely under the control
of the Group.
The accounting policies for the recognition of
provision or disclosure of contingent liabilities are
described in note 7.28 and the main estimates and
assumptions in note 8.5.
The main contingent liabilities arise from various
situations, most notably:
► notwithstanding the clarifications and existing
neutralization guarantees, potential
adjustments that may occur to "excluded
liabilities” payable by Banco Espírito Santo, S.A.
("BES") and that have not been transferred to
the Group;
► the existence of litigation resulting from the
resolution measure applied to BES, which, in
Our audit approach included the execution of the following
procedures:
► obtaining an understanding of the existing internal control
procedures in the process of disclosure of contingent
liabilities;
► reading the minutes of Novo Banco's management bodies,
the correspondence with regulators and with the
Resolution Fund;
► analyzing the responses to external confirmations from
external legal experts of the Group and inquiries to the
management and to the legal and tax experts on the
contingent liabilities of the Group;
► inspecting the documentation of the Resolution Fund, in
particular the annual report of 2019 and the public
communications from the Resolution Fund; and
► analyzing the disclosures contained in the consolidated
financial statements, based on the requirements of
international financial reporting standards and in the
accounting records.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Statutory and Auditor’s Report
(Translation from the original document in Portuguese language
In case of doubt, the Portuguese version prevails)
31 December 2021
Statutory and Auditor’s Report
(Translation from the original document in Portuguese language
In case of doubt, the Portuguese version prevails)
31 December 2021
Description of the most significant assessed
risks of material misstatement
Summary of our response to the most significant assessed
risks of material misstatement
spite of existing guarantees, may lead to effects
or impacts in the Group which not possible to
determine or quantify;
► existing lawsuits following the closing of the
sale and purchase agreement of the Group and
the setting up of the contingent capital
mechanism, signed between the Resolution
Fund and Lone Star;
► the Group includes participating institutions in
the Resolution Fund, which, as a result of the
measures implemented in the past, presents
uncertainties related to ongoing litigation and
the risk of a possible insufficiency of resources
to ensure compliance with its responsibilities.
Management expects that the Group will not be
required to make special contributions or any
other kind of extraordinary contributions to
fund resolution measures applied to the BES
and Banif, as well as the contingent capital
mechanism and the indemnities mechanism.
In spite of the management consideration that it is
not likely that the situations described above
materialize in impact on the Group's financial
statements, the magnitude of these impacts would
be quite significant.
During 2021, the Group considered that, from the
difficulty in interpretation or compliance with tax
law and regulations recently enacted, there is a
probable risk that an outflow of resources
embodying economic benefits will be required.
The risk assessment and the assumptions are
matters of judgement by the management which
requires complex analysis using internal and
external legal experts by the Group.
Given the relevance of these contingencies for the
Group, we consider this topic as a key audit matter.
Responsibilities of management and the supervisory board for the consolidated financial
statements
Management is responsible for:
► the preparation of consolidated financial statements that presents a true and fair view of the Group´s
financial position, financial performance and cash flows in accordance with International Financial
Reporting Standards as endorsed by the European Union;
► the preparation of the Management Report, Corporate Governance Report and the Non-financial
statement in accordance with the laws and regulations;
► designing and maintaining an appropriate internal control system to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error;
► the adoption of accounting policies and principles appropriate in the circumstances; and
► assessing the Group’s ability to continue as a going concern, and disclosing, as applicable, matters
related to going concern that may cast significant doubt on the Group´s ability to continue as a going
concern.
The supervisory body is responsible for overseeing the Group’s financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
► identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
► obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control;
► evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management;
► conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group ’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going concern;
► evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves fair presentation;
► obtain sufficient and appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements. We
are responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion;
► communicate with those charged with governance, including the supervisory body, regarding, among
other matters, the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit;
► from the matters communicated with those charged with governance, including the supervisory body, we
determine those matters that were of most significance in the audit of the consolidated financial
statements of the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter; and
► we also provide the supervisory body with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, the measures we took to
eliminate those matters or the related safeguards we applied.
Our responsibility additionally includes the verification of the consistency of the Management Report with the
consolidated financial statements, and the verifications under nr. 4 and nr. 5 of article 451 of the Commercial
Companies Code regarding corporate governance, as well as verifying that the Non-financial statement was
presented.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Statutory and Auditor’s Report
(Translation from the original document in Portuguese language
In case of doubt, the Portuguese version prevails)
31 December 2021
Statutory and Auditor’s Report
(Translation from the original document in Portuguese language
In case of doubt, the Portuguese version prevails)
31 December 2021
Our procedures considered the OROC Technical Application Guide (GAT 20) on report in ESEF and included,
among others:
► gaining understanding of the financial reporting process, including the submission of the annual report in
valid XHTML format; and
► the identification and evaluation of the risks of material distortion associated with the marking-up of the
information of the financial statements, in XBRL format using iXBRL technology. This evaluation was
based on the understanding of the process implemented by the Group to mark-up the information.
In our opinion, the accompanying consolidated financial statements included in the annual report are presented,
in all material respects, in accordance with the requirements set out in the ESEF Regulation.
Lisbon, March 9, 2022
Ernst & Young Audit & Associados – SROC, S.A.
Sociedade de Revisores Oficiais de Contas
Represented by:
(Signed)
António Filipe Dias da Fonseca Brás - ROC nr. 1661
Registered with the Portuguese Securities Market Commission under license nr. 20161271
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
On the Management Report
Pursuant to article 451, nr. 3, paragraph e) of the Commercial Companies Code, it is our opinion that the
Management Report was prepared in accordance with the applicable legal and regulatory requirements and the
information contained therein is consistent with the audited consolidated financial statements and, having regard
to our knowledge and assessment over the Group, we have not identified any material misstatement.
As mentioned in article 451. Nr. 7 of the Commercial Companies Code, this opinion is not applicable to the Non-
financial statement included in the Management Report.
On the Corporate Governance Report
Pursuant to article 451, nr. 4 of the Commercial Companies Code, in our opinion, the Chapter 6. Corporate
Governance included in the Management Report includes the information required to the Group to provide as per
article 29-H of the Securities Code, and we have not identified material misstatements on the information
provided therein in compliance with paragraphs c), d), f), h), i) and m) of nr.1 of the said article.
On the Non-financial statement
Pursuant to article 451, nr. 6 of the Commercial Companies Code, we inform that the Group prepared the
Sustainability Report separated from the Management Report, which includes the Non-financial statement, as
required in article 508-G of the Commercial Companies Code, being the same disclosed together with
Management Report.
On additional items set out in article 10 of the Regulation (EU) nr. 537/2014
Pursuant to article 10 of the Regulation (EU) nr. 537/2014 of the European Parliament and of the Council, of 16
April 2014, and in addition to the key audit matters mentioned above, we also report the following:
► We were appointed as auditors of Novo Banco, S.A. (Group´s Parent Entity) for the first time in the
shareholders' general meeting held on 21 December 2017 for a mandate from 2018 to 2020. We were
reappointed in the shareholders' general meeting held on 22 October 2020 for a second mandate from
2021 to 2024;
► Management has confirmed that they are not aware of any fraud or suspicion of fraud having occurred
that has a material effect on the financial statements. In planning and executing our audit in accordance
with ISAs we maintained professional skepticism and we designed audit procedures to respond to the
possibility of material misstatement in the consolidated financial statements due to fraud. As a result of
our work we have not identified any material misstatement to the consolidated financial statements due
to fraud;
► We confirm that our audit opinion is consistent with the additional report that we have prepared and
delivered to the supervisory body of the Group on this date; and
► We declare that we have not provided any prohibited services as described in article article 5 of the
Regulation (EU) nr. 537/2014 of the European Parliament and of the Council, of 16 April 2014, and we
have remained independent of the Group in conducting the audit.
European Single Electronic Format (ESEF)
The accompanying consolidated financial statements of Novo Banco, S.A. for the year ended 31 December 2021
must comply with the applicable requirements set out in the Commission Delegated Regulation (EU) 2019/815 of
17 December 2018 (ESEF Regulation).
Management is responsible for preparing and disclosing the annual report in accordance with the ESEF
Regulation.
Our responsibility is to obtain reasonable assurance about whether the consolidated financial statements,
included in the annual report, are presented in accordance with the requirements set out in the ESEF Regulation.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Ernst & Young
Audit & Associados - SROC, S.A.
Avenida da República, 90-6º
1600-206 Lisboa
Portugal
Tel: +351 217 912 000
Fax: +351 217 957 586
www.ey.com
(Translation from the original document in the Portuguese language. The opinion on European Single Electronic
Format is only applicable in the Portuguese Version. In case of doubt, the Portuguese version prevails)
Statutory and Auditor’s Report
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Opinion
We have audited the accompanying financial statements of Novo Banco, S.A. (the Bank), which comprise the
Balance Sheet as at 31 December 2021 (showing a total of 44,341,445 thousand euros and a total equity of
2,799,402 thousand euros, including a net profit for the year of 225,908 thousand euros), and the Income
Statement, the Statement of Comprehensive Income, the Statement of Changes in Equity and the Statement of
Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant
accounting policies.
In our opinion, the accompanying financial statements give a true and fair view, in all material respects, of the
financial position of Novo Banco, S.A. as at 31 December 2021, and of its financial performance and its cash
flows for the year then ended in accordance with International Financial Reporting Standards as endorsed by the
European Union.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) and other technical and
ethical standards and guidelines as issued by the Institute of Statutory Auditors. Our responsibilities under those
standards are further described in the “Auditor’s responsibilities for the audit of the financial statements” section
below. We are independent of the Bank in accordance with the law and we have fulfilled other ethical
requirements in accordance with the Institute of Statutory Auditors´ code of ethics.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
The key audit matters in the current year audit are the following:
1.
Impairment for loans and advances to customers
Description of the most significant assessed
risks of material misstatement
Summary of our response to the most significant assessed
risks of material misstatement
The caption loans and advances to customers
includes an accumulated impairment amount of
1,235,757 thousands of euros ("K€"), with an
impairment loss of 147,106 K€ recorded in the
period on Impairment or reversal of impairment on
financial assets not measured at fair value through
profit or loss. The details of the impairment for
loans and advances to customers, the related
accounting policies, methodologies, definitions and
assumptions are disclosed in the notes to the
financial statements (Notes 6.16, 7.1, 18, 22 and
39.3)
Our audit approach included the execution of the following
procedures:
► obtaining the understanding, evaluating the design and
testing the operational effectiveness of the existing internal
control procedures in the process of quantification of
impairment losses for loans and advances to customers;
► performing analytical procedures on the evolution of the
balance of the impairment for loans and advances to
customers, comparing it with last year and with the
expectations, considering the changes in the loan portfolio;
► selecting a sample of customers individually assessed for
impairment to evaluate the assumptions used by
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A member firm of Ernst & Young Global Limited
Statutory and Auditor’s Report
(Translation from the original document in Portuguese language
In case of doubt, the Portuguese version prevails)
31 December 2021
Description of the most significant assessed
risks of material misstatement
Summary of our response to the most significant assessed
risks of material misstatement
In order to calculate this estimate on the
impairment loss of the loans and advances to
customers, management made judgments such as
the business model assessment, the evaluation of
significant increase in credit risk, the classification
as default, the definition of groups of financial
assets with similar credit risk characteristics and the
use of models and assumptions. For relevant
exposures on an individual approach, the
impairment is determined based on the judgment
from Bank specialists on the evaluation of credit
risk.
In addition to the complexity of the models, its use
requires the treatment of a significant volume of
data, which raises issues on its quality and
availability.
The effects of the Covid-19 pandemic may not be
completely resolved nor fully martialized, with their
full impact still uncertain. As so, the impairment for
loans and advances to customers has to take into
consideration an eventual decrease in the credit
quality of the assets in the event of the risk
materializing.
Given the degree of subjectivity and complexity
involved, the use of alternative approaches, models
or assumptions may have a material impact on the
value of the estimated impairment, which makes we
consider this topic as key auditing matter.
management in quantifying impairment. This analysis
included the information containing business models, the
financial situation of the debtors and the collateral appraisal
reports. Inquiring of Bank experts in order to obtain an
understanding of the recovery strategy defined and the
assumptions used.
► analyzing the impacts estimated by the Bank to reflect the
end of the moratoria and the possible emergence of defaults
in this population of debtors;
► analyzing the documents formalizing the relevant sale
operations of loans and advances to customers and assessed
the impact in the financial statements;
► obtaining the understanding and evaluating the design of the
model used to calculate the expected loss, testing the
calculation, comparing the information used in the model
with the source information, through the reconciliations
prepared by the Bank staff, evaluating the assumptions used
to fill gaps in data, comparing the parameters used with the
results of the estimation models and comparing the results
with the values in the financial statements;
► evaluating the reasonableness of the parameters used in the
calculation of impairment, highlighting the following
procedures:
i) understanding the methodology formalized and adopted
by management and comparing with the one effectively
used;
ii) evaluating the changes to models used by the Bank to
determine the parameters used in the impairment
calculation;
iii) on a sample basis, comparing the data used in the
calculation of the risk parameters with source
information, including testing the stage classification;
iv) inquiries to management’s experts responsible for
models and inspection of reports from internal audit and
regulators; and
v)
inspection of the reports with the results of the
operational assessment of the model (back-testing);
► testing the reasonableness of the overlays, in particular the
ones to respond to the additional judgmental areas resulting
from the end of the moratoria and assessing the governance
associated with these overlays;
► reading the minutes of the Credit Impairment Committees
and of the correspondence with the Resolution Fund; and
► analyzing the disclosures included in the explanatory notes
to the financial statements, based on the requirements of
international financial reporting standards and accounting
records.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Statutory and Auditor’s Report
(Translation from the original document in Portuguese language
In case of doubt, the Portuguese version prevails)
31 December 2021
Statutory and Auditor’s Report
(Translation from the original document in Portuguese language
In case of doubt, the Portuguese version prevails)
31 December 2021
2. Valuation of restructuring funds
Description of the most significant assessed
risks of material misstatement
Summary of our response to the most significant assessed
risks of material misstatement
As disclosed in the Notes to the financial
statements, on 31 December 2021 (note 22), the
Bank held financial assets mandatorily at fair value
through profit or loss in the amount of 2,250,308
K€, of which €425,363 K€ and 1,265,718 K€ refer
to, respectively, shares and other securities with
variable income.
Part of these financial assets, in the amount of
2,063,378 K€, is measured at fair value using
valuation methodologies that include parameters
not observable in the market (level 3) and includes
the participation of the Bank in restructuring funds
(note 38). The valuation of these financial
instruments is an estimation of fair value performed
by management which uses internal models and
parameters not observable in the market.
During 2020, the management, with the assistance
of external experts, performed an independent
valuation of these financial instruments, which was
reviewed in 2021 based on observed market
evolution on similar markets.
Management considers that this reviewed valuation
corresponds to the best estimate of fair value as of
31 December 2021.
The consideration of this issue as a key audit matter
was based on its materiality for the financial
statements and the fact that the use of different
valuation techniques or assumptions could lead to
different estimates of fair value.
Our audit approach included the execution of the following
procedures:
► obtaining the understanding of the existing internal control
procedures on the valuation of financial instruments
process;
► performing analytical procedures on the evolution of the
value of these financial instruments, comparing the values
with last year and with the expectations formed, which
included understanding the variations occurred. Comparing
with the valuation of other market participants as disclosed
in public available information;
► analyzing the proposals to transact these assets and
comparing with the book value;
► analyzing the financial statements of the funds and testing
the evolution comparing with the values considered by the
Bank;
► testing the review of value performed and analyzing the
assumptions used; and
► analyzing the disclosures included in the explanatory notes
to the financial statements based on the requirements of
international financial reporting standards and in the
accounting records.
3. Measurement of real estate obtained through credit foreclosure
Description of the most significant assessed
risks of material misstatement
Summary of our response to the most significant assessed
risks of material misstatement
The caption Other assets includes real estate assets
of 165,231 €. The accounting policies and the
details of these assets are disclosed in the notes to
the financial statements (notes 6.18, 7.6 and 28).
As disclosed in note 6.18 to the financial
statements, the Other assets include real estate that
were essentially obtained by credit foreclosure and
for which the Bank has implemented a plan pursuant
to its sale. These real estate assets are valued at the
lower of net book value and the fair value less cost
to sell. The fair value is based on appraisals
prepared by experts hired by management.
The fair value results from an estimation process by
the management that relies on judgments and
assumptions and is embodied in an evaluation
Our audit approach included the execution of the following
procedures:
► obtaining the understanding of the existing internal control
procedures in the process of valuation of the real estate
assets received by credit recovery;
► performing analytical procedures on the value of the assets
included in the Other assets, compared with last year and
with the expectation formed, which include the
understanding of the variations that have occurred and
identification of changes in the assumptions and
methodologies;
► for a sample of real estate assets, testing the
reasonableness of the methodologies and assumptions used
by management’s external experts registered in CMVM. For
3/8
Description of the most significant assessed
risks of material misstatement
Summary of our response to the most significant assessed
risks of material misstatement
carried out by contracted independent experts. The
assumptions considered include the best use that
can be given to the asset, what could be considered
as a comparable transaction or the potential yield
that can be obtained.
The consideration of this topic as a key audit matter
is based on its materiality to the financial
statements and the fact that the use of different
valuation techniques or assumptions could lead to
different estimates of fair value.
these assets, inspection of the eventual promissory sale
contracts and the certificate of land register;
► inspecting the real estate sale contracts and testing the
derecognition requirements and the calculation of gains and
losses recorded;
► analyzing the counterparties of the most significant sales in
order to assess eventual constraints to an arm’s length
transaction;
► for the most significant transactions with real estate assets
in the scope of the contingent capital agreement, obtaining
the Resolution Fund approvals;
► inquiries to the management experts on the assumptions
used for a sample of assets and read the minutes of the
executive board;
► Inquiring the management about potential sale operations
and, when applicable, examining the offers received on the
assets and comparing with the fair value calculated by the
management; and
► analyzing the disclosures included in the explanatory notes
to the financial statements, based on the requirements of
international financial reporting standards and accounting
records.
4. Provisions and disclosure of contingent liabilities
Description of the most significant assessed
risks of material misstatement
Summary of our response to the most significant assessed
risks of material misstatement
As disclosed in note 31 to the financial statements,
there is a contingency amounting to 115,800 K€ for
which a provision was registered, additionally, the
notes to the financial statements disclose the
contingent liabilities (note 35) that may represent a
possible obligation to the Bank resulting from past
events. The occurrence of these obligations is
dependent on one or more future events that are
not entirely under the control of the Bank.
The accounting policies for the recognition of
provision or disclosure of contingent liabilities are
described in note 6.27 and the main estimates and
assumptions in note 7.5.
The main contingent liabilities arise from various
situations, most notably:
► notwithstanding the clarifications and existing
neutralization guarantees, potential
adjustments that may occur to "excluded
liabilities” payable by Banco Espírito Santo, S.A.
("BES") and that have not been transferred to
the Bank;
Our audit approach included the execution of the following
procedures:
► obtaining an understanding of the existing internal control
procedures in the process of disclosure of contingent
liabilities;
► reading the minutes of Novo Banco's management bodies,
the correspondence with regulators and with the Resolution
Fund;
► analyzing the responses to external confirmations from
external legal experts of the Bank and inquiries to the
management and to the legal and tax experts on the
contingent liabilities of the Bank ;
► inspecting the documentation of the Resolution Fund, in
particular the annual report of 2019 and the public
communications from the Resolution Fund; and
► analyzing the disclosures contained in the financial
statements, based on the requirements of international
financial reporting standards and in the accounting records.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Statutory and Auditor’s Report
(Translation from the original document in Portuguese language
In case of doubt, the Portuguese version prevails)
31 December 2021
Statutory and Auditor’s Report
(Translation from the original document in Portuguese language
In case of doubt, the Portuguese version prevails)
31 December 2021
Description of the most significant assessed
risks of material misstatement
Summary of our response to the most significant assessed
risks of material misstatement
► the existence of litigation resulting from the
resolution measure applied to BES, which, in
spite of existing guarantees, may lead to effects
or impacts in the Bank which not possible to
determine or quantify;
► existing lawsuits following the closing of the
sale and purchase agreement of the Bank and
the setting up of the contingent capital
mechanism, signed between the Resolution
Fund and Lone Star;
► the Bank includes participating institutions in
the Resolution Fund, which, as a result of the
measures implemented in the past, presents
uncertainties related to ongoing litigation and
the risk of a possible insufficiency of resources
to ensure compliance with its responsibilities.
Management expects that the Bank will not be
required to make special contributions or any
other kind of extraordinary contributions to
fund resolution measures applied to the BES
and Banif, as well as the contingent capital
mechanism and the indemnities mechanism.
In spite of the management consideration that it is
not likely that the situations described above
materialize in impact on the Bank's financial
statements, the magnitude of these impacts would
be quite significant.
During 2021, the Bank considered that, from the
difficulty in interpretation or compliance with tax
law and regulations recently enacted, there is a
probable risk that an outflow of resources
embodying economic benefits will be required.
The risk assessment and the assumptions are
matters of judgement by the management which
requires complex analysis using internal and
external legal experts by the Bank.
Given the relevance of these contingencies for the
Bank, we consider this topic as a key audit matter.
Responsibilities of management and the supervisory board for the financial statements
Management is responsible for:
► the preparation of financial statements that presents a true and fair view of the Bank´s financial position,
financial performance and cash flows in accordance with International Financial Reporting Standards as
endorsed by the European Union;
► the preparation of the Management Report, the Corporate Governance Report and the Non-financial
statement in accordance with the laws and regulations;
► designing and maintaining an appropriate internal control system to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error;
► the adoption of accounting policies and principles appropriate in the circumstances; and
► assessing the Bank’s ability to continue as a going concern, and disclosing, as applicable, matters related
to going concern that may cast significant doubt on the Bank´s ability to continue as a going concern.
The supervisory body is responsible for overseeing the Bank’s financial reporting process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
► identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
► obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Bank’s internal control;
► evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management;
► conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Bank’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Bank to cease to continue as a going concern;
► evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation;
► communicate with those charged with governance, including the supervisory body, regarding, among
other matters, the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit;
► from the matters communicated with those charged with governance, including the supervisory body, we
determine those matters that were of most significance in the audit of the financial statements of the
current period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter; and
► we also provide the supervisory body with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, the measures we took to
eliminate those matters or the related safeguards we applied.
Our responsibility includes the verification of the consistency of the Management Report with the financial
statements, and the verifications under nr. 4 and nr. 5 of article 451 of the Commercial Companies Code
regarding corporate governance, as well as verifying that the Non-financial statement was presented.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Statutory and Auditor’s Report
(Translation from the original document in Portuguese language
In case of doubt, the Portuguese version prevails)
31 December 2021
Statutory and Auditor’s Report
(Translation from the original document in Portuguese language
In case of doubt, the Portuguese version prevails)
31 December 2021
Our procedures considered the OROC Technical Application Guide (GAT 20) on report in ESEF and included,
among others gaining understanding of the financial reporting process, including the submission of the annual
report in valid XHTML format.
In our opinion, the accompanying financial statements included in the annual report are presented, in all material
respects, in accordance with the requirements set out in the ESEF Regulation.
Lisbon, March 9, 2022
Ernst & Young Audit & Associados – SROC, S.A.
Sociedade de Revisores Oficiais de Contas
Represented by:
(Signed)
António Filipe Dias da Fonseca Brás - ROC nr. 1661
Registered with the Portuguese Securities Market Commission under license nr. 20161271
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
On the Management Report
Pursuant to article 451, nr. 3, paragraph e) of the Commercial Companies Code, it is our opinion that the
Management Report was prepared in accordance with the applicable legal and regulatory requirements and the
information contained therein is consistent with the audited financial statements and, having regard to our
knowledge and assessment over the Bank, we have not identified any material misstatement.
As mentioned in article 451. Nr. 7 of the Commercial Companies Code, this opinion is not applicable to the Non-
financial statement included in the Management Report.
On the Corporate Governance Report
Pursuant to article 451, nr. 4 of the Commercial Companies Code, in our opinion, the “Corporate Governance”
chapter included in the Management Report includes the information required to the Bank to provide as per article
29-H of the Securities Code, and we have not identified material misstatements on the information provided
therein in compliance with paragraphs c), d), f), h), i) and m) of nr.1 of the said article.
On the Non-financial statement
Pursuant to article 451, nr. 6 of the Commercial Companies Code, we inform that the Bank prepared the
Sustainability Report separated from the Management Report, which includes the Non-financial statement, as
required in article 508-G of the Commercial Companies Code, being the same disclosed together with
Management Report.
On additional items set out in article 10 of the Regulation (EU) nr. 537/2014
Pursuant to article 10 of the Regulation (EU) nr. 537/2014 of the European Parliament and of the Council, of 16
April 2014, and in addition to the key audit matters mentioned above, we also report the following:
► We were appointed as auditors of the Bank for the first time in the shareholders' general meeting held on
21 December 2017 for a mandate from 2018 to 2020. We were reappointed in the shareholders' general
meeting held on 22 October 2020 for a second mandate from 2021 to 2024;
► Management has confirmed that they are not aware of any fraud or suspicion of fraud having occurred
that has a material effect on the financial statements. In planning and executing our audit in accordance
with ISAs we maintained professional skepticism and we designed audit procedures to respond to the
possibility of material misstatement in the financial statements due to fraud. As a result of our work we
have not identified any material misstatement to the financial statements due to fraud;
► We confirm that our audit opinion is consistent with the additional report that we have prepared and
delivered to the supervisory body of the Bank on this date; and
► We declare that we have not provided any prohibited services as described in article 5 of the Regulation
(EU) nr. 537/2014 of the European Parliament and of the Council, of 16 April 2014, and we have
remained independent of the Bank in conducting the audit.
European Single Electronic Format (ESEF)
The accompanying financial statements of the Bank for the year ended 31 December 2021 must comply with the
applicable requirements set out in the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018
(ESEF Regulation).
Management is responsible for preparing and disclosing the annual report in accordance with the ESEF
Regulation.
Our responsibility is to obtain reasonable assurance about whether the financial statements, included in the
annual report, are presented in accordance with the requirements set out in the ESEF Regulation.
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454
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes EVALUATION REPORT FROM THE GENERAL AND SUPERVISORY BOARD ON THE ADEQUACY AND
EFFECTIVENESS OF THE ORGANIZATIONAL CULTURE IN PLACE IN GROUP NOVO BANCO, S.A. AND THE
GOVERNANCE AND INTERNAL CONTROL FRAMEWORKS AS DEFINED IN B) C) AND D) OF ARTICLE 58TH
OF THE NOTICE FROM BANK OF PORTUGAL Nº 3/2020
INTRODUCTION
ACTIVITIES PERFORMED
1. This evaluation report is presented to comply with b) c) and d) of Article 58th of the Notice from
Bank of Portugal nº 3/2020 (the “Notice”) and belongs to the annual report on the evaluation of
the adequacy and effectiveness of the organizational culture in place in Group Novo Banco, S.A.
(the “Group”) and the governance and internal control frameworks with reference to the period
from December 1, 2020 to November 30, 2021.
RESPONSIBILITIES
2. The management and the supervisory bodies are responsible, under their respective competencies,
for promoting the existence in the Group of an organizational culture supported in high ethical
standards which,
• promotes an integral risk culture which encompasses all activity areas of the Group and ensures
the identifications, assessment, monitoring and control of the risks that the Group is or can
become exposed to;
• promotes a professional conduct of prudence and responsibility to be observed by all employees
and members of the management and supervisory boards under their roles and aligned with high
ethical standards documented in a code of conduct specific for the Group;
• reinforces the reputation and levels of confidence in the Group, both internally and in its relations
with customers, investors, supervisory bodies and other third parties.
It is also the responsibility of the management and supervisory bodies to ensure that: the
organizational culture of the Group, and the governance and internal control frameworks, including
the remuneration actions and policies and other matters included in the Notice, are adequate and
effective and promote a sound and prudent management; the Group evaluates the adequacy
and effectiveness of the organizational culture in place and the governance and internal control
frameworks and issues a yearly report on the results of that evaluation (the “Report”).
3.
It is our responsibility to issue this report as described in b) c) and d) Article 58th of the Notice to
include in the Report.
4. To comply with our responsibilities regarding the organizational culture and the governance and
internal control frameworks, we performed the following activities, for which we present a summary:
• Maintained regular interactions with the Executive Board of Directors. For that purpose, we met
with members of the Executive Board of Directors to clarify issues and we read the minutes of
the meetings of the Executive Board of Directors. During these meetings, the situation of the
Group was presented to us, including matters related to the subsidiaries, which allowed us to
understand the internal controls in place at Group level;
• We met with the managers responsible for the Risk Management, Compliance, and Internal Audit
functions at Group level; we read the annual reports of these control functions; we reviewed the
statement of independence and inquired if there was any fact or circumstance which may impair
that independence. Regarding the internal audit annual report, we took into consideration the
validation of the classification of internal control deficiencies;
• We assessed the audit plan for 2021 and the results of the internal audit actions described in the
reports;
• We analyzed the ‘NB Self Assessment – Conclusions & Action Plan Report on the implementation
of the Notice in the Group, and met with the managers responsible for this report;
• We met with the external auditor and analyzed the contents of the Audit report, Impairment
Reports, Asset Safekeeping Report, Additional Report to the Supervisory Board, the interim
limited review reports for March 31, June 30, and September 30 of 2021 and the preliminary
version of the Factual Findings Report to be issued by Ernst & Young – Audit & Associados –
SROC, S.A., including the test on the classification of the deficiencies. We reviewed the content
of the communication of significant deficiencies of internal control of the Group sent by the
external auditor on December 7, 2021;
• We read the Group Report and the individual reports of the relevant subsidiaries, including the
deficiencies and planned measures to correct them, and assessed the status of those measures;
• We assessed the coherence between the internal control systems of the subsidiaries, having
analyzed the content of the evaluation reports of the supervisory boards of the relevant
subsidiaries, in addition to the procedures mentioned above.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes INHERENT LIMITATIONS
5. The General and Supervisory Board is aware of the inherent limitations of any internal control
framework which, irrespective of its adequacy and effectiveness, may only provide reasonable
assurance to the management and supervisory bodies on the purposes related to organizational
culture, governance, and internal control systems, as well as other matters described in the Notice.
Additionally, an appropriate internal control in place regarding the financial and prudential reporting
is not in itself sufficient to ensure the reliability of the disclosed financial and prudential information.
In fact, there are prior processes in the different operational and support areas of the Group, where
it is critical to have an adequate internal control in place to ensure the reliability of the information
provided to the areas responsible for the prudential and financial reporting. Therefore, given the
inherent limitations on any control system, deficiencies, fraud, or errors may occur without being
detected.
Given the usual dynamic in any internal control system, any conclusion on the adequacy or
effectiveness of that system cannot be projected for future periods, as there is the risk that the
controls and procedures in place may become inappropriate due to changes in the context or
deterioration in the compliance with the policies, procedures, and controls.
The evaluation of the impacts of the deficiencies is an estimate of the Executive Board of Directors
and follows the criteria defined by the Group and the process to classify the deficiencies according
to the criteria and assumptions. Given the judgement associated with the definition of the criteria,
the assumptions and in the evaluation of the impacts, different classification could be given to the
deficiencies in case different criteria or assumptions were defined. Equally, an evaluation performed
on another date on the same deficiency could reach different conclusions, and the impact of a
deficiency can materialize differently from what was estimated.
CONCLUSION
6. As described in the Report, there are deficiencies classified as F3 – High risk and F4 – Severe, which
can lead to a high or very high impact on the financial position, capital requirements, governance,
leverage, business model or risk monitoring of the Group.
7. For each of the deficiencies a mitigation plan and a proposed implementation timeline was presented
to us. Considering the importance of the matter in the Group, these deficiencies are being monitored
by the internal structure, by the internal control functions and by the Executive Board of Directors,
and the implementation status will be regularly reviewed by the General and Supervisory Board.
8. The ‘NB Self Assessment – Conclusions & Action Plan’ report identifies several matters of the
Notice where the Group is still in the process of implementing the measures to adequately comply
with the Notice.
9. Considering the activities we performed, which are described in paragraph 4 above, and except for
the eventual impact of the matters described in paragraphs 6 to 7, notwithstanding the ongoing
implementation the new requirements of the Notice and with reasonable assurance in respect to
the material aspects:
•
In our opinion, the organizational culture and the governance and internal control frameworks of
Novo Banco, S.A. were adequate and effective on November 30, 2021.
• We appreciated positively the completeness status of the defined measures from December 1,
2020 to November 30, 2021 to correct the deficiencies identified in the Report.
• We declare that the classification given to the deficiencies classified as level F3 “High” or level F4
“Severe” is adequate.
•
In our opinion, the internal control functions, including the outsourced operational procedures,
are performed with adequate quality and independence.
• The financial and prudential reporting processes were, insofar as we could appreciate due to the
procedures inherent in our responsibilities, reliable from December 1, 2020 to November 30, 2021.
• The processes to produce information disclosed to the public by the Group due to legal or
regulatory requirements, including the financial and prudential disclosures were, insofar as we
could appreciate due to the procedures inherent in our responsibilities, reliable from December 1,
2020 to November 30, 2021.
• The requirements to disclose information to the public resulting from applicable law or regulation
and related to the matters described in the Notice were, insofar as we could appreciate due to the
procedures inherent in our responsibilities, adequately complied with from December 1, 2020 to
November 30, 2021.
• The internal control systems of the subsidiaries were, insofar as we could appreciate due to
the procedures inherent in our responsibilities, coherent with the internal control system of the
parent;
• The Group has no foreign branches or offshore institutions with remuneration policies, as these
entities do not make payments of remuneration to any member of governing bodies or personnel.
OTHER MATTERS
10. This Evaluation Report is prepared and issued solely for the information of the Executive Board of
Directors of the Group and to be presented to the Bank of Portugal as required by the Notice and
as an integral part of the Report. Therefore, it cannot be used for any other purpose, or read outside
the context of the Report, nor can it be presented to third parties without our previous written
consent.
Lisbon, December 15, 2021
(This report was approved by the General and Supervisory Board at a meeting held on December 15,
2021.)
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes REPORT OF THE GENERAL AND SUPERVISORY BOARD AND OPINION OF THE FINANCIAL AFFAIRS
(AUDIT) COMMITTEE ON THE MANAGEMENT REPORT AND ON THE SEPARATE AND CONSOLIDATED
FINANCIAL STATEMENTS OF NOVO BANCO, S.A. FOR THE YEAR ENDED 31 DECEMBER 2021
Pursuant to the mandate we have been given and in compliance with the provisions of h) and q) of
paragraph 1 of article 441° and article 444.º of the Commercial Companies Code and the bylaws of
Novo Banco, S.A. (“novobanco”), the General and Supervisory Board (“GSB”) is required to issue the
Annual Report on the activity developed and the Financial Affairs (Audit) Committee is required to
issue an opinion on the Management Report and the separate and consolidated financial statements
of novobanco, which comprise the separate and consolidated income statement and separate and
consolidated statement of comprehensive income, separate and consolidated balance sheet, separate
and consolidated statement of changes in equity and separate and consolidated statement of cash
flows and the respective Annexes, as well as on the proposed application of Results, presented by the
Executive Board of Directors (“EBD”) of novobanco, for the year ended on 31 December 2021.
1. Report of the General and Supervisory Board for the year 2021
1.1. Composition and scope
In accordance with the applicable law, novobanco’s bylaws and best practices at the date of this Annual
Report, six of the ten members who comprise the GSB, including the Chairman, are independent. The
GSB has the powers given to it by law, by the Bylaws and by its own regulation, including the supervision
of all matters related to risk management, compliance and internal audit.
During 2021, we have monitored the activity of the Bank and its more significant subsidiaries. The
activity of the GSB is directly supported by 5 (five) committees, in which were delegated some of
its powers, namely the Financial Affairs (Audit) Committee, the Risk Committee, the Compliance
Committee, the Nomination Committee and the Remuneration Committee, as provided for in articles 6
and 16 of the Bylaws of novobanco and the Regulation of the GSB.
These Committees are chaired and composed by members of the GSB and can also have the presence
of EBD members or other managers responsible for the areas covered by the activities of these
Committees.
The GSB meets monthly and additionally when required, performing the duties assigned to it by law,
by the Bylaws of the Bank and by its own regulation. The EBD informs the GSB on all relevant matters,
timely and on a comprehensive written or verbal manner.
1.2. Activity undertaken in 2021
General and Supervisory Board
During the year 2021, the GSB held 17 meetings, where several issues were discussed, analyzed and
approved. These issues included the separate and consolidated financial statements of novobanco for
the year ended 31 December 2021 and the Half Year 2021 consolidated financial statements as well
as the financial results for the first and third quarters of 2021, the 2021-2023 Strategic and Medium
Term-Plans, the NPA Plan for 2021-2023 and the strategy and risk appetite for 2021.
Other issues included the approval and/or follow-up of the sale of novobanco’s assets, in particular, the
sale of the Spanish Branch (Project Toro), the sale of NPA portfolios and related assets (Harvey, Orion
and Wilkinson), the follow-up of the events and of the report of the Parliamentary Inquiry Commission,
the follow-up of the Court of Auditors audit, the follow-up and approval of the PR Communication
strategy, the follow-up and approval of the process of rebranding carried out in the last quarter of 2021,
the follow-up of the activity of the Internal Audit Department, the follow-up of the most relevant
lawsuits against the Group, the follow-up of IFRS 9 arbitration processes, the follow-up of year 2019
Special Audit and the follow-up of Tagus Park HQ Project.
The GSB has also reviewed and/or approved several amendments to internal policies, such as the
Code of Conduct, the Conflicts of Interest Policy, the Policy on Related Party Transactions, GSB’s own
regulation, the regulation of the Remuneration Committee, as well as the changes to the Policy for
Selection and Evaluation of novobanco’ Statutory Auditor, the Remuneration Policies for Management
and Supervisory Bodies, and novobanco’s Succession Policy.
In what concerns matters relating to the CCA Agreement, the GSB monitored regularly all issues related
to year 2020 CCA call and analyzed the reports issued by the Verification Agent.
The GSB also followed closely the evolution of the DGComp’s commitments, through the analysis of
the various Monitoring Trustee reports, analysed the Group’s Impairment report, the Group’s Internal
Control report, the Self-Assessment Reports of the Risk, Audit and Compliance Functions and approved
the Internal Audit Plans of 2021 and for 2022.
In terms of other interactions with the regulators, the GSB followed closely the MREL targets set by
the SRB and approved the operations put in place to reach those targets, analyzed 2021’s Stress Tests
results, reviewed and approved ICAAP and ILAAP, closely followed the evolution of the implementation
of the Group’s ESG Strategy, was regularly updated on regulatory changes and correspondence with
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes the key stakeholders of novobanco, and approved the annual Fit and Proper revision for the Executive
Board of Directors members, General and Supervisory Board members and the members of the Board
of Directors of the subsidiaries Novobanco dos Açores, Banco BEST and GNB Gestão de Ativos.
The GSB also approved the activity plans of the General and Supervisory Board and its Committees
for 2022 (on a first approach, to be updated regularly), and followed-up on matters related to DTA
and conversion rights attributed to the State for years 2015, 2016 and 2017, novobanco´s response,
actions and initiatives with respect to COVID19 and the global pandemic effects in the economy,
including credit moratoria.
Throughout the year, the GSB was updated with respect to the operating results of the Group, evolution
of retail, corporate, treasury and digital businesses, capital and liquidity position of novobanco as well
as regular forecasts for the full year 2021 (capital and results).
At the end of the year 2021, the General and Supervisory Board completed its evaluation report on the
adequacy and effectiveness of the organizational culture in place in Group novobanco (the “Group”) and
the governance and internal control framework with reference to the period from December 1, 2020 to
November 30, 2021 in compliance with b) c) and d) of Article 58 of Bank of Portugal’s Notice nº 3/2020
(the “Notice”) in which the GSB acknowledged the deficiencies that were found and approved for each
of those deficiencies the mitigation plans and the proposed implementation timelines presented by
the Executive Board of Directors.
These deficiencies included 57 deficiencies classified as F3 – High risk and 5 classified as F4 – Severe.
The CEO and the Chief Financial Officer (CFO) participated in the meetings as guests. Other EBD
members participated in the meetings on request for specific topics. The Monitoring Commission was
present in all meetings.
Under and for the purposes of analyses and verifications performed, the General and Supervisory Board
requested, and obtained, documentation and clarification for the several issues raised.
Financial Affairs (Audit) Committee
The Financial Affairs (Audit) Committee held 23 meetings during 2021 and concentrated its activity
in the assessment of the Bank’s financial statements, and reports of the statutory auditor for
the financial year 2021, as well as the oversight of the Internal Audit (IA) activity. The IA oversight
included, among other, discussing and analyzing related monthly status update reports (covering
items such as the implementation of the agreed plan and related findings, follow-up of outstanding
issues, and topics relating to IA resources and practices), and reviewing the Annual Activity execution
report for 2021, as well as approving the Internal Audit Plans for 2021 and for 2022 (including Multi-
year plans). Throughout 2021, the main Non-Performing Assets sales operations were monitored by
the Audit Committee, namely, Project Harvey, Orion and Wilkinson, and the potential acquisition of
equity (Project Molin). During 2021, the Committee also followed the evolution of several relevant
projects, including the RWA review process, the MREL requirements and the operations to meet those
requirements, RaRoc outputs and the Valuation Unit’s activity. The Audit Committee also monitored
during 2021 the valuation of novobanco´s equity investments, including restructuring funds, as well as
the calculations and details of the restructuring costs. The Committee monitored on a continued basis,
the independence and the work of the external auditor, including the supervision and approval of the
provision of other additional services to novobanco’s Group performed by that auditor. The meeting
agendas included updates on the regulatory aspects of the Bank’s activity, the follow-up of the 2021-
2023 Medium-Term Plan and the evaluation process for supervisory purposes (SREP).
The Audit Committee monitored internal control systems during the year and completed the year-end
2021 review of the assessment of the control functions in accordance with Notice 3/2020 of Banco de
Portugal.
The statutory auditor, as well as the Head of Internal Audit, the CEO and the Chief Financial Officer
(CFO) participated in the meetings as guests, where necessary.
In addition, Committee members met separately with the statutory auditor and the head of internal
audit, without the presence of the members of the EBD.
Risk Committee
The Risk Committee held 17 meetings during the year 2021. In addition to the approval of loans to
individual clients or groups of clients associated, according to its own Regulation, the Committee
analyzed and discussed the strategy and risk appetite and limits for 2021, according to the Medium-
Term Plan for 2021-2023, the NPA 2021-2023 Plan, Covid-19 Key Initiatives and Actions 2021, including
credit moratoria. Other topics discussed by the Risk Committee included the main monthly indicators
of risk (credit risk, market risk and operational risk) and the provisions and impairments of credit in the
financial statements for the financial year of 2021, as well as the approval of the Risk Activity Plan for
2022. Non-performing loans of the Bank were also reviewed and compared with peers and with the
indicators of the European Banking Authority (EBA). The governance model of risk was also subject to
review in the year. The meeting agendas regularly included reports of the regulatory aspects relating
to the risks faced by the Bank, particularly in the context of LGD’s, IRBB and the revision of the risks
inherent to the sectors affected by COVID 19, revisions of economic groups highly exposed to these
sectors and the conclusions of the SREP. The calculation of risk-bearing capacity of the Bank was also
a frequent subject in the meetings of the Committee. Other risk regulatory topics were discussed and
reviewed throughout the year, including the results of on-site regulatory reviews.
The Risk Committee reviewed at year end 2021 the assessment of the risk management activities in
accordance with Notice 3/2020 of Banco de Portugal, including the Annual Self-Assessment Report
(RAA)
The head of the risk function, the CEO and the Chief Risk Officer (CRO) participated in meetings as
guests, where necessary.
Compliance Committee
The Compliance Committee held 7 meetings during 2021 and deliberated on governance, regulatory
and legal issues related to the Bank’s structure and operations, having examined and discussed the
issues of regulatory compliance of the Bank, including the Notice 3/2020 of Banco de Portugal and
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes EBA Guidelines on internal control and compliance areas implementation and the AML legislation,
the legislation on data protection, whistleblowing procedures, other legal and regulatory affairs and
other relevant ongoing projects. The Committee reviewed and discussed issues of related-parties
transactions and conflicts of interest, as well as the more relevant lawsuits regularly accompanied by
the Bank.
• The completeness of the accounting records and documents that support them;
• The existence of goods or values belonging to novobanco’s Group or received in guarantee, deposit
or other title; and
•
If the accounting policies and valuation criteria adopted lead to an adequate representation of the
assets and of the results of novobanco.
Nomination Committee
The Nomination Committee held 3 meetings during the year 2021. The annual assessment (individual
and collective level) of the adequacy and suitability of the members of the Executive Board of Directors
and GSB of novobanco and members of the Board of Directors of the subsidiaries novobanco dos Açores,
Banco BEST and GNB Gestão de Ativos was performed by the Fit & Proper Office. The Succession Plan
Matrix for Key Function Holders was also analyzed. During 2021, Fit and Proper was also approved for
the new Head of the Treasury and for the new Compliance Officer of novobanco, as well as for the new
CEO of novobanco dos Açores.
The report on gender diversity was also analyzed as well as the Selection and Evaluation Policy for the
Management and Supervisory Bodies and Key Function Holders and novobanco’s Succession Policy.
Remuneration Committee
The Remuneration Committee held 5 meetings during the year 2021. At these meetings, the
Committee monitored the implementation of policies relating to the remuneration of the management
and supervisory bodies and staff and adopted a set of decisions related to the variable component
of remuneration for EBD and identified staff for year 2021. The Remuneration Committee also set
and approved the main individual and collective performance indicators for the EBD members for the
year 2021, based on the approved budget for this year and approved the 2020’s EBD KPI results. The
Remuneration Committee approved the Identified Staff for year 2021 following recommendation of
the EBD. It also approved the budget for 2021 variable remuneration and the amounts to be paid to
identified staff and EBD members (subject to the rules approved in the respective policy).
The Remuneration Committee year-end 2021 completed the review of a centralized and independent
internal analysis aiming at verifying the compliance of the remuneration policies in place in accordance
with the law and with Banco de Portugal Notice 3/2020.
During the year of 2021, the GSB and their Committees have issued several opinions arising from
requests made by the EBD, under article 15, paragraph 5 of the Bylaws.
The GSB and the Audit Committee held meetings throughout the year with the audit firm Ernst & Young
Audit & Associados - SROC, S.A., both in the context of the audit of the separate and consolidated
financial statements for the year ended 31 December 2021, and regular monitoring and discussion of
the most relevant aspects resulting from the assessment of the internal control.
Under the existing articulation with the audit firm, the GSB obtained the necessary and sufficient
explanations to the questions within the scope of its functions and, in particular:
The GSB reviewed all matters contained in the Legal Certification of accounts and Audit Report on the
consolidated and individual financial statements issued by the statutory auditors for the year ended
31 December 2021, having obtained from the auditors all the necessary clarifications, on the relevant
matters included under the same audit:
•
Impairment for loans and advances to customers;
• Financial instruments measured at fair value and classified as level 3 under IFRS 13;
• Restructuring provisions;
• Restructuring funds valuation;
• Pension funds liabilities valuation;
• Measurement of real estate obtained through credit foreclosure;
• NPA sale transactions;
• Contingency on property tax;
• Disclosure of other contingent liabilities;
• Contingent Capital mechanism matters; and
• Aviso 3/2020 Bank of Portugal matters.
All these matters were monitored by the GSB and their Committees, which, on these matters, were
kept updated by the EBD, by the relevant Departments and by the external auditors.
In preparing the accounts of the financial year, the GSB analyzed the management report as well as other
documents submitted by the EBD, having proceeded to verifications and obtaining the clarifications
deemed necessary, which comply with the applicable legal requirements.
The accounts were audited by the audit firm Ernst & Young Audit & Associados SROC, S.A., which
issued the Audit Report on the financial information for the year ended 31 December 2021 on 8 March
2022, without qualifications nor emphasis of matter, to which the GSB expresses its agreement.
The GSB reviewed the Additional Report to the Supervisory Board issued by the statutory auditors on
the same date, which corresponds in substance to the issues that have been discussed along the year,
and for which they have obtained all the necessary clarifications.
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1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes 2. Opinion of the Audit Committee on the Management Report and
the separate and consolidated financial statements
Within the scope of our work, and in accordance with article 444, number 2, of the Code of Commercial
Companies, we verified that:
a. the separate and consolidated balance sheet, the separate and consolidated income statement and
the separate and consolidated statement of comprehensive income, the demonstration of changes
in individual and consolidated equity, the separate and consolidated cash flow statement and the
corresponding Annex, allow a proper understanding of the asset, liabilities and the separate and
consolidated financial position of novobanco, its separate and consolidated results of changes in
equity and the separate and consolidated cash flows;
b. the accounting policies and valuation criteria adopted are appropriate;
General and Supervisory Board and the Financial Affairs (Audit) Committee
Byron James Macbean Haynes
Chairman of the General and Supervisory Board
and member of the Financial Affairs (Audit) Committee
John Herbert
Member of the General and Supervisory Board
Karl-Gerhard Eick
Vice-Chairman of the General and Supervisory Board
and Chairman of the Financial Affairs (Audit) Committee
Donald John Quintin
Member of the General and Supervisory Board
c. the management report is sufficiently clear as to the evolution of the business and the situation
of the Bank and all the subsidiaries included in the consolidation, highlighting the most significant
aspects, as well as a description of the main risks and uncertainties that the Bank faces;
Kambiz Nourbakhsh
Member of the General and Supervisory Board
and member Financial Affairs (Audit) Committee
Robert A. Sherman
Member of the General and Supervisory Board
d. the proposed application of results does not contradict the legal and statutory provisions applicable;
and
e. in accordance with paragraph 5 of article 420 of the Code of commercial companies, (applicable for
remission of article 441, number 2), the information about the corporate governance includes the
elements required under article 245-A of the Securities Code and other applicable legislation.
Mark Andrew Coker
Member of the General and Supervisory Board
Carla Antunes da Silva
Member of the General and Supervisory Board
Therefore, it is the Committee’s opinion to:
Benjamin Friedrich Dickgiesser
Member of the General and Supervisory Board
William Henry Newton
Member of the General and Supervisory Board
a. Approve the management report as well as the other documents of account, for the year of 2021,
presented by the Executive Board of Directors, considering the aspects highlighted in the Audit
report on the consolidated and separate financial statements of the Bank for that year issued by
the audit firm; and
a. Approve the proposed application of results submitted by the EBD in its Management Report.
Finally, the General and Supervisory Board would like to express its appreciation to the Executive Board
of Directors, to the managers in charge of the various areas of the Bank and to the remaining employees,
as well as to the auditors, for the cooperation and the support in the completion of its work.
Lisbon, 9 March 2022
460
1.0 MESSAGE 2.0 MANAGEMENT REPORT 3.0 SUSTAINABILITY REPORT 4.0 FINANCIAL STATEMENTS AND FINAL NOTESFinancial Statements and Final Notes Abbreviations and Acronyms
ECB
European Central Bank
DGCOMP
Directorate-General | Competition
CCA
Contingent Capital Agreement
ESG
Environment, Sustainability and Governance
YTD
Year-to-date - change since the start of the year
YoY
Year-on-Year - change on a year earlier
NII
Net Interest Income
LCR
Liquidity Coverage Ratio
€
euro
€mn
million euro
€bn
billion euro
bps
pp
basis points
percentage points
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Annual Report 2021